Examines the relationship between health insurance and the demand for regulation or compulsory planning for hospitals. Reimbursement insurance has caused an increase in the demand for and price of medical services, resulting in concern about efficiency in production of health services. The history of attempts at regulation suggests, however, that such regulation is ineffective, when not actually counterproductive. Improvement is more likely to be produced by a change from reimbursement insurance to major risk insurance, variable cost insurance, or prepaid health maintenance organizations. It is often argued that proprietary hospitals would skim off the profitable patients and ignore the unprofitable ones; but charity medicine constituted only 1.5 percent of hospitals' activities in 1970, suggesting that this objection is not valid. Moreover, there is no sound reason why some categories of patients should be forced to subsidize others. Compulsory regulation is undesirable, but the collection and dissemination of health care statistics are much needed. 24 pp. Bibliog.