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September 5, 1990

What Do We Do About Costs?

JAMA. 1990;264(9):1161-1165. doi:10.1001/jama.1990.03450090099038

AS A SOCIETY we have conflicting views about the financial cost of health care. On one hand, virtually everyone is concerned about paying for health care. Health care expenditures now exceed $600 billion, an increase of 700% since just 1970, twice the rate of increase for other goods and services. At current rates, expenditures will reach $1 trillion by 1995 and $1.5 trillion by 2000. Health care, which was only 5% of the gross national product in 1940, is now more than 11%, and if current trends continue, it will reach 15% by the end of the century.1 Everyone is affected. For industry, the average cost per employee increased 18.6% in 1988 (to $2354), more than twice the rate of increase seen the previous year.2 Employers' future obligations for retiree health benefits is in the range of one-quarter trillion dollars.3 Five years ago, states spent about 8%