No copies of this work may be distributed electronically outside of the subscribed institution, in whole or in part, without express written permission from the JHU Press . The distress that managed care has provoked among consumers and health care providers is also the source of significant changes in state health policy. State officials are increasingly aggressive managers of the health plans and providers with whom they contract for acute, long-term, and behavioral health care. In more than a dozen states, government purchasers collaborate with their business counterparts to regulate these contractors by requiring them to disclose information. Outdated ideologies obscure the emerging influence of the states as both purchasers of care and coregulators with private corporations of a competitive market in health services.
States are the largest purchaser of health care in every regional market.
They purchase health care for their employees and retirees, as well as for poor children and adults, frail elders, persons with mental illness and developmental disabilities, and prisoners. Like their counterparts among private sector purchasers, these officials found compelling the logic of making health care markets more competitive. Managed care promised to contain the rate at which costs increased and to improve the quality of care. The new strategy could contain costs by reducing the oversupply of hospital and specialty services and preventing overutilization of care. This new approach to policy substituted competition for state regulation of capital investment and prices.