THE STATES' ROLE IN HEALTH CARE COST CONTAINMENT*

Under the Social Security Act of 1935, the federal government expanded its involvement in maternal and child health care programs through grants-in-aid to state and local health departments. The Medicaid legislation of 1965 vastly enlarged federal expenditures, and state responsibilities. State performance was frequently criticized, especially in health care cost containment. Recently, the states have initiated several efforts to link cost containment and the quality of health care.