HEALTH CARE: CONTROLLING COSTS

One dollar of every eight produced by the American economy is now spent on health care, a level no other nation approaches. The health care costs in the federal budget, including Medicare and Medicaid, are the fastest growing categories of federal spending - surpassed only by the ballooning interest on the national debt. All agree that the increases are unsustainable. BUSH

Seeks to cut costs but with minimal central government control over the health care market. He proposes to:

Reform medical malpractice laws to cut the liability of doctors and hospitals. The Bush administration estimates that at least $21 billion a year is spent on defensive medicine, work which is medically unnecessary but protects the physician from legal action.

Promote the use of coordinated care in state Medicaid programs, for better prevention and more efficient choices of treatment. Promote individual responsibility for health maintenance and disease prevention, since reducing the need for medical intervention cuts costs.

Limit increases in premium costs. Allow the self-employed to deduct the full cost of their insurance premiums. Reduce administrative costs, cut government mandates to allow more insurer flexibility, and reduce insurance paperwork. CLINTON

Promises to contain costs so that they rise no faster than wages, thus saving Americans $700 billion over the next eight years. He proposes to:

Limit total consumer spending on health through a national health budget and state-level budgets set by health boards.

Promote a variety of local health-care networks - organized systems of insurers, clinics, hospitals, and doctors - that charge fixed fees for each consumer's total care. States would cap the fees to meet their total spending targets.

For insurers not organized into full-service networks, states would set fees permitted for each medical service rendered. Would set up government-sponsored purchasing groups to give individuals and small companies better buying power for health insurance policies. Would reform malpractice laws to get more cases out of the courts and into more efficient dispute resolution forums. PEROT

In the short term, he writes, "a cost containment and prevention program should be developed immediately." He offers no further guidance. In the long term, he proposes a National Health Board to oversee cost containment and overall reforms. He would also ask states to prepare comprehensive reforms that meet cost-containment targets. He would then give states the flexibility from federal rules to start pilot programs.