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

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  • Melnick, G.A.
  • Zwanziger, J.

Abstract

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.

Suggested Citation

  • Melnick, G.A. & Zwanziger, J., 1995. "State health care expenditures under competition and regulation, 1980 through 1991," American Journal of Public Health, American Public Health Association, vol. 85(10), pages 1391-1396.
    • Handle: RePEc:aph:ajpbhl:1995:85:10:1391-1396_2
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    Cited by:

    1. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters, in: Frontiers in Health Policy Research, Volume 1, pages 77-116, National Bureau of Economic Research, Inc.
    2. David Meltzer & Jeanette Chung, 2002. "Effects of Competition Under Prospective Payment on Hospital Costs Among High- and Low-Cost Admissions: Evidence from California, 1983 and 1993," NBER Chapters, in: Frontiers in Health Policy Research, Volume 5, pages 53-102, National Bureau of Economic Research, Inc.
    3. Ivanov, Alexander V. & Zwanzig, Silvelyn, 2002. "Saddlepoint Expansions in Linear Regression," Journal of Multivariate Analysis, Elsevier, vol. 83(1), pages 183-207, October.
    4. Mas, Nuria, 2009. "Responding to financial pressures. The effect of managed care on hospitals' provision of charity care," IESE Research Papers D/782, IESE Business School.
    5. Mas, Nuria, 2005. "Managed care and the safety net: More pain for the uninsured?," IESE Research Papers D/596, IESE Business School.
    6. Stadhouders, Niek & Kruse, Florien & Tanke, Marit & Koolman, Xander & Jeurissen, Patrick, 2019. "Effective healthcare cost-containment policies: A systematic review," Health Policy, Elsevier, vol. 123(1), pages 71-79.

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