such cost-control measures will avoid the painful choices between raising taxes and increasing the financial contributions that the elderly make to Medicare. The situation is made more difficult by the fact that Medicare is headed for trouble even though it hardly addresses one of the most important and rapidly growing needs— long-term care for chronic illness. Consequently, it seems likely that Medicare is going to require both new cost-control measures and new money so the program can assure actuarial soundness in the Hospital Insurance trust fund and extend a greater measure of government protection for long-term care.

Although cost-containment policies are in place for hospitals, Medicare needs a new system of paying individual physicians in order to help bring their cost increases under control. The current system underwrites cost escalation and fails to create incentives for physicians to economize on the use of health services. Other measures might include a greater emphasis on alternative health-care delivery systems and greater government efforts to steer Medicare patients toward "preferred providers" who charge reasonable fees and have demonstrated their cost-effectiveness. These reforms are easier to outline than to implement. One should not under-estimate the difficulty of decelerating Medicare cost increases without jeopardizing the quality of health care or access to it.