The Congress is considering a range of alternatives for reforming the health care system. This study, requested by the Subcommittee on Health of the House Committee on Ways and Means, examines the potential of the managed competition approach to reduce the level and rate of growth of national health expenditures, and the specific features of managed competition that could generate significant savings. In keeping with the Congressional Budget Office's (CBO's) mandate to provide objective and impartial analysis, this study contains no recommendations.