Rules of the Game:

How Public Policy Affects Local Health Care Markets

July/August 1998
Health Affairs , vol.17, no.4 (July/August 1998): 140-148
Loel S. Solomon


ublic policy is an important force that shapes the way local health care systems operate. It establishes underlying "rules of the game" and influences the decisions of national and regional entities to enter and exit local markets. These dynamics are discussed in terms of several key policy areas: Medicaid and Medicare managed care programs, state regulation of managed care, the general trend toward deregulation counterbalanced by policies aimed at curbing market excesses, regulation of providers’ rates, certificate-of-need rules and oversight of conversions from nonprofit to for-profit status. There is wide variation in the mix of policies in effect in some health care markets, as well as marked differences in the way state and local officials implement similar policies. In addition, political cultures and interest group dynamics affect the way health care systems function.

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