Rehabilitation is one of the fastest growing areas in the health industry. Supported by several key pieces of legislation, psychologists have established themselves as integral health care providers in rehabilitation. Although psychologists have benefited from legislated membership in rehabilitation, most individual psychologists and the psychological associations have failed to recognize the importance of public policy for the practice of psychology. Escalating health care costs have resulted in major revisions in the manner in which health insurers reimburse treatment. Medicare, the major federal health insurance provider, increasingly has been viewed as a model for the provision of all health care. The historic exclusion of psychologists from Medicare has limited the scope of psychologists' practice and the growth of professional psychology. The recent inclusion of psychologists in Medicare improves but does not solve practice and policy issues confronting psychology. Knowledge of national health policy formulation and greater participation by psychologists in health policy is necessary to secure the scope of professional practice most psychologists expect.

Health care costs in the United States continue to increase, as does the number of individuals who lack health care coverage. The magnitude of these critical problems assures that health reform of the health care system will continue to be debated over the next decade. Increasing health care costs are associated with increased complexity of services and a greater number of health care providers. As health costs increase and the number of individuals covered by private insurance decreases, states will face increasing pressure to develop effective methods of providing coverage for those without health insurance. Employer mandates will be viewed as one method of extending health coverage. Psychologists must be involved in policy issues so as to ensure the utilization of psychological knowledge and attention to psychological and behavioral health needs.

During the past 20 years, psychologists have successfully modified federal statutes, resulting in recognition of the profession's clinical and research expertise. Despite these successes, professional psychology's training institutions have largely failed to address basic issues in health policy and the implications of national health policy for psychology. The importance of public health programs under Title VII of the Public Health Act and the significance of full inclusion of psychology in all federal health programs, including Titles XVIII (Medicare) and XIX (Medicaid), are poorly understood by most health psychologists. Federal health policy decisions, including management of excessive federal health spending, will dictate the growth and opportunities for health psychologists. Understanding federal health spending and recent federal initiatives such as Resource Based Relative Value Scale, Diagnostic Related Groups, and practice guidelines will be of benefit to health psychologists.

The rapid changes in the health care environment have brought about ethical and professional challenges for rehabilitation and rehabilitation psychology. The response of rehabilitation psychologists to the threats and opportunities of these challenges will significantly impact the welfare of persons with disabilities and the future of our profession. Managed care organizations have focused their efforts on the management of acute illness. Persons with disabilities and other chronic illnesses pose real challenges to current concepts in managed care. Ethical concerns arc being raised about patient access to care, self-determination, confidentiality, provider accountability, and marketing in managed care systems. Rehabilitation psychologists' familiarity with persons with disabilities and skills in program development and outcome evaluation place them in a key position to influence the changes in the health care environment. To be effectual, however, fundamental changes must be made in practice, education and training, research focus, and professional activities.

Two correlated problems, rampant escalation of health-care costs and the lack of access to health care for many Americans, challenge long-term solutions to our health-care crisis. Historically, free markets have provided the most effective method of controlling costs. Although the current health-care system is highly competitive, it falls far short of being a truly competitive marketplace emphasizing competition around cost and quality. A health-care system based on managed competition in which the marketplace is structured to create competition on cost and quality provides great promise for regulating health costs. Erosion of health-care benefits under our current system of employer-based health insurance threatens the effectiveness of any market-based solution. The 21st Century Health Care Act combines the cost-effectiveness and universal access derived through a single revenue spigot with the power of a market approach created by managed competition.