Health Care Market Reform in Congress: The Uncertain Path from Proposal to Policy

Abstract

In 1980 Ronald Reagan swept into the presidency on a wave of antigovernment sentiment after promising deregulation, decentralization, and restoration of individual responsibility and opportunity. This pro-competitive, antiregulatory temperament was captured in legislative proposals to stimulate competition in the financing and delivery of health services.1 In the 96th and 97th Congresses from 1979 to 1983, several bills were introduced to create financial incentives to expand consumer choice in purchasing health services, induce greater price competition among health care professionals and institutions, improve efficiency in the organization and delivery of services, and ultimately lower the costs of health care. The moment appeared ripe for an earnest attempt at structural reform of the health care system: national health care expenditures continued to increase at a pace well above the costs of other consumer goods and services, with ho-spital expenditures leading the way. The highly regulatory hospital cost containment program offered by President Jimmy Carter had gone down to defeat in 1979.