Karen Davis, health economist who served as deputy assistant secretary for health policy in the Department of Health and Human Services in the Carter administration, has been quoted (Health Affairs, 2009) as saying that industry response to Carter's "voluntary effort (VE)" legislation proposal "dissipated within three years of its initial roll-out in 1978 and had no lasting impact on rising hospital expenditures." Why would such a reminder be relevant more than 30 years later? What characteristic of health expenditure spending relative to the macroeconomy explains the failure of VE?

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The Answer of Karen Davis, health economist who served as deputy assistant secretary for health policy in the Department of Health and Human Services in the Carter administration, has been quoted (Health Affairs, 2009) as saying that industry response to Carter's "voluntary effort (VE)" legislation proposal "dissipated within three years of its initial roll-out in 1978 and had no lasting impact on rising hospital expenditures." Why would such a reminder be relevant more than 30 years later? What characteristic of health expenditure spending relative to the macroeconomy explains the failure of VE?

Karen Davis, Health Economist Who Served as Deputy Assistant Secretary