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8 Annals of Health Law 147 (1999)


The purpose of this Article is to illustrate the challenges state regulators face when attempting to translate theory into practice in the context of health care risk regulation. Section I reviews the evolution of the risk-bearing market in health care, recognizing that while risk is an inherent part of everyday life, it takes on a delicate meaning when used in the context of health care. Cost and demographic data will be discussed to provide a compelling rationale for the ongoing forceful movement toward cost containment strategies embodied in managed care strategies, as well as the need to develop the next generation of risk-bearing entities. Sections II and III provide an overview of state health care regulation and an examination of Minnesota's regulatory experience. Sections IV through VII detail the emergence and ongoing development of direct contracting strategies.

Throughout this Article, strategies will be reviewed from both a theoretical and practical perspective. These experiences can teach valuable lessons and underscore the challenges inherent in translating theory into practice, and the obvious, yet unwilling tradeoffs that are necessary to truly reform the health care regulatory infrastructure. The Article will conclude with a set of guiding principles that should be considered by state regulators in the development and oversight of new and emerging risk-bearing entities.