Bending the Curve : What Really Drives Health Care Spending

Contrary to their stated intent, the health care reform bills passed by the House and Senate would sub­stantially increase health care spending if either became law. Based on a fundamental misunderstanding of what drives health care spending, these bills exacerbate many of the inefficiencies in the U.S. health care system, particu­larly those that drive spending upward. While an increased prevalence of disease, the third-party payment system, technological change, and waste and fraud are likely con­tributing to increased health care spending, the main prob­lem is a pricing system that insulates both patients and producers from normal market incentives to reduce prices and match spending on services to their value to patients. Real health care reform to improve care and control costs would empower patients by expanding their menu of choices, allow patients and providers to benefit from choosing more cost-effective treatments, reform Medicare and Med­icaid, and create a national market for health insurance and competitive markets for health care.

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