This paper examines four propositions inherent in competitive approaches to containing the growth of health care expenditures: (1) that health maintenance organizations can deliver health care less expensively than the fee-for-service system; (2) that under certain competitive conditions. HMOs would prosper; (3) that HMO successes would force FFS insurers and providers to become more efficient; and (4) that creating the competitive conditions would be politically feasible. Reasons for doubting the latter three propositions are plentiful, and the strategy is therefore judged unlikely to succeed.

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