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This report describes the tools available to business and union leaders for containing the health care costs for which employers and employees are responsible. It discusses the nature of rising medical costs, including what is known about the causes, and why they are troubling. It outlines underlying methods for cost control, including reducing the use of care, shifting care to lower-cost modalities, obtaining a better price for care, reducing employees' needs for care, and shifting responsibility for health care costs to other parties. It describes the major tools for cost management, including utilization management; alternative delivery systems, such as health maintenance organizations and preferred provider organizations; benefit redesign; wellness programs; and strategies to make use of the advantages of size. It describes cost-containment options for Medicare and Medicaid. Finally, it draws together the most important considerations of broad strategy in health cost management and the main social issues to be faced.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

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