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This research brief describes work documented in The RAND (RP-395).

Excerpt: Spiraling health care expenditures, which exceeded $1 trillion in 1996, have driven policymakers to explore a variety of economic incentives for reducing utilization and controlling costs. Although these incentives are intended to promote optimal utilization, they have, instead, been shown to decrease the use of both unnecessary and necessary care. This suggests that financial incentives designed to affect utilization need to incorporate some assessment of the appropriateness of the care being delivered.

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