Insurance, competition and cost containment.

Most economists have suggested that the growing presence of insurance, including Medicare, Medicaid, Blue Cross and the commercial insurers, is largely responsible for the rapid rise of health care costs in the United States. It is the contention of this paper, however, that the insurance industry in the private sector in the United States may help in the effort to contain costs rather than solely stimulating rapidly increasing costs. A number of methods that insurers have employed to contain costs, including monitoring provider behavior and prospective reimbursement, are identified. It is cautioned, however, that although health insurer cost containment efforts will continue to expand in the future, perversities in the U.S. tax laws, potential provider opposition and the complexities of medicine will continue to make cost containment a difficult task.