The author examines the issues surrounding the challenges inherent in maintaining a high level of quality in health care while containing costs in public programs and trying to strike the right balance in monitoring and regulating the quality of health care in the private sector. He reviews the growth in both enrollments and expenditures in Medicare and Medicaid; discusses the competitive environment ushered in by Medicare payment reforms; and comments on subsidizing care for the uninsured. The paper concludes with a discussion on quality-cost trade-offs and the limits of quality measures.