If global budgets consistently reduce health care expenditures by cutting inefficiency and economic rents (i.e., by lowering the relative price of services), their appeal as a public policy tool is clear. This paper shows the French inpatient global budget policy, implemented in 1984, was successful in slowing expenditure growth. It did so, however, by reducing the volume of services; the relative price of these services remained constant. Compared with previous research, these findings suggest the effect of global budgets depends on the method of implementing the policy and the health care infrastructure on which the expenditure policy is imposed.
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