The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

Rising health care costs, which have thwarted both public and private efforts to slow their growth, are at the heart of the chronic crisis of the U.S. health care system.¹ These rising costs consume ever greater portions of the budgets of governments, businesses, and households, leaving fewer resources for other activities. Attempts to deal with the burden of rising health care costs have left millions of Americans without health insurance or with insurance that is seriously inadequate.

Children and pregnant women have not escaped the fallout from the rapid increase in health care costs. Despite recent expansion of government programs (see the Hill article in this journal issue), more than 1 in 5 children were without health insurance at some time during 1991. As documented by Monheit and Cunningham in this issue, children without health insurance use less preventive care and less care for acute illness. Presumably their health suffers as a consequence of this reduced utilization. Legislation has been introduced at the federal level and in several states to extend health insurance coverage to more children, and public opinion polls indicate that the public is sympathetic to the health care needs of children. Yet there appears to be a reluctance to commit resources to new health care programs in an era of general fiscal austerity. Given the inexorable rise in health care costs, concerns about the wisdom of expanding health care financing without either bringing costs under control or addressing what many feel are the inefficiencies of the current system appear justified.

A better understanding of the current system, however, is key to any effort to reform health care financing for children and pregnant women. Generalizations drawn from the observations of the health care system as a whole may not be totally applicable to children, especially at the level of detail necessary for effective policymaking.² Accordingly, this article presents estimates of annual expenditures on medical care services for children covering the period from conception through age 18 years including expenditures on pregnancy and delivery. Among the questions addressed are: How are these health care expenditures distributed among different types of health services and different sources of payment? Is the level and mix of medical care expenditures different for children of different ages and different for children as compared to adults? Are these differences great enough so that an incremental approach to health care financing reform which focuses initially on children makes sense? What about the rate of growth in expenditures on health care for children? Is it as rapid as the rate of growth in aggregate health care expenditures? Is it driven by similar forces, so that developing effective cost control strategies will have to be an integral feature of any effort to expand children's access to health care services?

To be sure, a description of where we are today and some of the trends that got us here will not be sufficient to point the way to effective reforms, and some of the information presented may raise as many questions as are answered. Still, it appears that, in this era of heightened cost-consciousness, knowledge about the nature of U.S. expenditures on health care for children is vital for those who would improve children's health.