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

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

Published 1996

by Glenn Melnick, Jack Zwanziger

Purchase Print Copy

Add to Cart Paperback6 pages Free

This paper examines health expenditure growth under two alternative policy approaches: competition-based managed care and state government rate regulation. 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 U.S. average and with four states with established regulation programs. 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. On the basis of these findings, a properly structured competitive approach could play a significant role in controlling health expenditures in the United States.

Originally published in: American Journal of Public Health, October 1995, v. 85, no. 10, October 1995, pp. 1391-1396.

This report is part of the RAND reprint series. The Reprint was a product of RAND from 1992 to 2011 that represented previously published journal articles, book chapters, and reports with the permission of the publisher. RAND reprints were formally reviewed in accordance with the publisher's editorial policy and compliant with RAND's rigorous quality assurance standards for quality and objectivity. For select current RAND journal articles, see External Publications.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.