• The problem of how to pay the increasingly costly medical bills of retired Americans is rapidly rising as a national priority, not just among policymakers, but also among the general public. As a result, deeper thinking within the health policy community on two broad issues is taking place: How changes in government programs will affect the delivery of health care in the United States; and whether the coming changes that are made to control costs—especially within Medicare— will ultimately improve quality of care delivered as well. These topics provided the focal points of a policy forum sponsored by the Employee Benefit Research Institute Education and Research Fund in Washington, DC. This Issue Brief summarizes the policy forum discussion and puts it in the context of these issues more generally. • The increase in health care costs slowed in 2003, but this trend hit a plateau during the first half of 2004. Currently, employers are trying to control health care cost increases by giving employees more responsibility for paying a growing proportion of their medical bills. Concurrent with this shift in cost sharing is a renewed focus on managed care strategies, such as utilization review, disease and case management, limited provider networks, and provider incentives designed to encourage efficient clinical practice.