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State health care expenditures under competition and regulation, 1980 through 1991.

G A Melnick and J Zwanziger

RAND, Santa Monica, CA 90407-2138, USA.

OBJECTIVES. 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.

Related articles in AJPH:

Containing state health care expenditures--the competition vs regulation debate.

S Glied, M Sparer, and L Brown
AJPH 1995 85: 1347-1349. [PDF]  

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