In 1972, Congress extended Medicare to individuals under 65 who have chronic renal disease. The End-Stage Renal Disease Program (ESRD) was established to control quality of care and costs. This paper analyzes the cost control strategy and draws lessons for any future national health insurance. Tentative lessons extracted: The design phase of implementation is crucial for cost control. Bureaucratic conflict between agencies will affect cost control design. Cost control efforts will take place in a context in which the threat of litigation is present. Regulation of medical services cannot move too far from the prevailing medical consensus in imposing cost control constraints. If salaried physicians are a significant proportion of total physician population, this can be regarded as advantageous to cost control. Ceilings on expenses constitute a reasonably effective means of controlling costs. Many key variables affecting costs are clinical in nature, thus policy toward such variables may have substantial cost implications.