Health-care costs are rising at more than 11 percent a year in the United States for several reasons:

* The current insurance system, insulated by tax breaks and heavy employer subsidies, has disconnected health-care users and providers from the costs of using medical care.

* As much as half of the increasing costs may come from very expensive high technology that most frequently only adds a few months to patients' lives.

* The 37 million Americans without insurance get less early preventive care and more late emergency care, which is expensive. One solution

The "managed care" approach, which the Clinton administration favors, combines elements of free-market incentives and of government regulation and subsidy.

The market part of the system features:

* Buyers band together in purchasing groups to get big-company bargaining leverage over providers of health care, as well as the efficiencies of scale that cut administrative costs.

* The purchasing groups negotiate with full-service health-plan providers, such as health-maintenance organizations, or other networks of private doctors and clinics, to keep prices low. To keep quality high through consumer choice, each purchasing group offers members a menu of health plans to choose from.

* The US caps the tax deduction that employers and employees take for health-care premiums above a set level so that people bear more of the cost of very generous plans.

The regulation part of the system features:

* Government creates and subsidizes regional health insurance purchasing cooperatives that would also buy a minimum basic level of insurance for the poor or near-poor who cannot pay their own premiums.

* Businesses are required to offer insurance to their employees, and insurance companies are barred from turning anyone away because of medical history.

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