State regulation of health care costs has been increasing at the same time as criticism of governmental regulation in other sectors of the economy has been increasing.The authors examine major system elements necessary to effect cost control in health care, present normative models of value preferences which underlie alternative state cost control systems, and indicate control foci and intervention strategies for state government under the alternative models.The authors conclude that state governments should assume responsibility for controlling health care costs. Presently, state regulatory agencies should emphasize development of adequate information systems, strengthening of state regulatory capability, and implementation of experimental reimbursement programs rather than comprehensive and detailed rate setting.