A study by the Center for Studying Health System Change has concluded that the health care system is little better at controlling costs than a decade ago, in spite of the touted benefits of managed care. It argues that there is a 'medical arms race' in which doctors, hospitals and insurers are competing to provide the latest treatments, resulting in higher demand but also higher costs.

Costs are also harder to control because lawmakers have enforced minimum requirements, such as 48-hour hospital stays after childbirth. Consumers themselves have also proven resistant to more tightening of rules, such as requirements to obtain referrals before seeing specialists, and payments for services on a percentage basis rather than a flat-rate $10 or $20. Also, through mergers, doctors and hospitals have gained bargaining power in negotiations with insurers.

The result is likely to be that employers will charge employees higher deductibles and co-payments. Insurers may offer more options, and vary the price according to the cost of the doctor or service, much like brand name drugs are often priced higher than generic drugs. Preventive treatment may increase, especially for those at risk for costly and chronic conditions.

(Updated April 1, 2001)