INVESTOR RESPONSE TO HEALTH-CARE COST-CONTAINMENT LEGISLATION - IS AMERICAN HEALTH-POLICY DESIGNED TO FAIL

Two failed congressional attempts to control escalating health costs a re examined. The data show that investors apparently anticipated their failure. With the implementation of a policy encouraging market compe tition, however, investors expected larger firms to benefit and firms with previously high profit growth rates to lose. From the viewpoint o f the politics of structural choice, it appears that identifiable stru ctural flaws were deliberately designed into both laws in ways that wo uld promote failure and protect key interest groups.