If competition proposals are to reduce the cost of medical care, they must put forth a key role for physicians. Inasmuch as most proposals focus on the market for health insurance, the means by which policies that affect insurers are transmitted to influence the behavior of physicians are largely unknown. A larger role for competing groups of physicians is hypothesized, but the effect of competition is likely to be uneven, because group practice physicians are already in the most competitive areas of the country in terms of the density of physicians, and very few are in rural areas or in other particular regions of the country. Little evidence can be found in productivity or fee level differences between solo and group practice physicians. Thus the value of promoting group medical practices rests on their ability to reduce the use of expensive medical care. It is possible that competition proposals may not hold much promise for reducing costs. Nevertheless, they may still be worthwhile if they are better able than the present system to translate the wishes of consumers into the services of providers.