Factors driving costs must figure into reform.

Employers and employees seeing their health plan premium costs rise faster than physician and hospital costs is one indication that the U.S. healthcare system is in a state of crisis. Examining factors behind providers' and health plans' costs--demographics, increased hospital expenses, insurance overhead, fragmentation among managed care plans, and failure of some cost-containment initiatives--indicates the shape healthcare reform must take if it is to succeed. Reform proposals in the 1990s likely will entail simplification and consolidation, such as providing universal access, consolidating managed care, and establishing a single-payer system.