The problem of the increasing cost of health care and responses to it raise complex issues of the cost-effectiveness of the system as well as of equity. Since the Second World War many nations have expanded their social services programmes rapidly in order to make medical care available to as many people as possible. In addition, technical progress has allowed for a greater number of illnesses to be treated, thus creating a greater number of patients. Consumer expectations that the latest technology should be widely used in public health care drove the costs still higher. As a result the cost of health services has been rising sharply in most countries, irrespective of the system of medical care that the country has. Government plays a significant role in health care in most countries and its growing cost, in addition to increasing the budget deficit, has put a great strain on the health care system. In countries depending largely on private health insurance schemes, the response to rising costs has been a substantial increase in health insurance premiums In countries with a national health care system, there have been steps to increase the often nominal charges that users of the system are expected to bear, while those with a mixed system of private insurance and public health services have attempted to pass on a larger share of the cost to patients. Concerted efforts have been made to cut costs through rationalization of benefits and contribution to medical insurance schemes. Financial stringency as well as a desire for rationalization has also led governments to seek a reduction in cash sickness benefits or to check the real growth of such benefits.
In 1982, America's medical bill climbed 12.5% to $32 billion, or more than one-tenth of the gross national product. Between 1960 and 1984 the cost of medical care benefits at constant prices multiplied five to ten times in many industrialized countries, and as a proportion of gross domestic product, health care tripled and quadrupled in some countries.
Private health care is not always affordable to the masses of people. However, the same profit motives that drive up every cost in the private sector affect local and national governments providing health services as well, since they must pay for medical drugs and supplies; laboratory, diagnostic, and therapeutic equipment; electricity, ambulance fuel, and building services; and everything else from administrative and medical salaries to food and laundry expenses. High profits account for one dimension of the levels of public health expenditures, waste and inefficiency account for another. Yet health care is only expensive in relation to the value received. Public health services need to be expanded, but they also need to be delivered more efficiently and more cost effectively.