Federal initiatives during the last decade have resulted in considerable changes in the American medical economy. Large sums of money have been infused into the system under Medicare and Medicaid, substantially improving access to care for the aged and the poor. At the same time, the improvements in knowledge and medical technology that have occurred have been largely underwritten by the tremendous increases in third-party payment mechanisms. These costly new technologies have contributed significantly to the high cost of hospital care and to the increased specialization of physician's services.

The chronic inflation in medical expenditures and the explosive increases in Federal subsidization of medical care have led to questions concerning the efficacy of medical care for improving health status. There is a considerable lack of evidence for a causal relationship between what is done to the patient and the outcome of the medical care process as measured by mortality, disability, and capacity to carry on activities.

Various attempts have been made to control the chronic inflation of medical expenditures, but success is uneven and elusive. Alternatives in financing medical care services currently under debate include various provisions to control costs and utilization, but attention should be directed to organizing American medical care services in general, toward the more rational use of our resources.

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