State health care expenditures under competition and regulation, 1980 through 1991.
OBJECTIVE
This paper examines health expenditure growth under two alternative policy approaches: competition-based managed care and state government rate regulation.


METHODS
Data are presented on cumulative growth in real per capita health expenditures between 1980 and 1991 so as to compare California, a state with a pro-competitive policy, with the US average and with four states with established regulation programs.


RESULTS
Real per capita expenditures for hospital services in the United States grew 54% between 1980 and 1991, while in California the growth was half the national rate, or 27%. Real per capita expenditures for physician services and drug expenditures in the United States grew by 82% and 65%, respectively, while in California these expenditures increased only 58% and 41%, respectively. California's growth rate was below that of all four regulatory states for all measures of health care cost inflation.


CONCLUSIONS
On the basis of these findings, a properly structured competitive approach could play a significant role in controlling health expenditures in the United States.
Melnick
G A
GA
RAND, Santa Monica, CA 90407-2138, USA.
Zwanziger
J
J
D002140:California; D003363:Cost Control; D005102:Health Expenditures / Q000706:statistics & numerical data*; D006291:Health Policy; D006302:Health Services Research; D006801:Humans; D018854:Managed Competition; D008396:Maryland; D008404:Massachusetts; D009515:New Jersey; D009518:New York; D011907:Rate Setting and Review; D013221:State Health Plans / Q000191:economics*; D014481:United States