All across the country there is a sense of urgency, and even of crisis over what is happening in the health industry. Of special concern are the rapid rate of increase in the cost of health care services and the increasing national expenditures for health care. For fiscal year 1976, the total U.S. spending for health care reached $149.8 billion, or a per capita expenditure of $638. Expressed as a percentage of the gross national product (GNP), the national spending for health care reached a record-breaking 8.6 percent.1 From the early 1960s--except during the period from August 1971 through April 1974, when the prices of medical care services were controlled--these prices have risen about two times faster than those of non-health-care services. Thus the differential between the prices of these two types of services has increased markedly during the period. Especially disturbing is that the cost of hospital care services, expenditures for which comprise the largest proportion (40 percent) of total national health care expenditures, are increasing faster than any other type of medical care services.

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