Market-oriented strategies, embodied in managed competition, have become the primary focus of contemporary U.S. health policy. This dominance reflects the emergence of a bipartisan coalition of support among political elites. This study traces the historical evolution of elite support for the market and suggests that the consensus favoring managed competition is deceptively fragile, with support riven by cleavages in the values used to judge fairness in the allocation of medical care. A unique data set of matched questions asked of both policy elites and the general public is used to document these differences in ethical norms. The implications of these cleavages help to explain three puzzling aspects of contemporary U.S. health policy: (1) the persisting inability to translate the principles of managed competition into politically feasible reforms, (2) the repeated failures to implement demonstration projects intended to test competitive pricing within the Medicare program, and (3) the inability of state regulations to assuage the public's concerns about managed care. Some prescriptions for a more revealing and effective treatment of market reforms in health policy conclude this study.

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