This book analyzes the experience of the seven-year federal mandate in a way that attempts to inform future choices by decision makers. Chapter 2 examines precedents to the National Health Planning and Resources Development Act, traces the 1974 legislative debate, and summarizes provisions of the statute and of subsequent amendments. Chapter 3 reviews the literature on health planning and supply regulation. Chapter 4 reviews operational theories. Two normative models are developed- a Model 1 approach for a centralized program whose primary purpose is cost containment and redistribution of resources and a Model 2 plan for a program emphasizing pluralism and local choice. Chapter 5 argues that structural mechanisms-the circumvention of states and funding based on formula rather than performance-did not provide incentives to achieve objectives. Chapter 6 addresses the absence of federal targets in many areas where the program was expected to have an impact. Chapter 7 presents state data on intermediate outcomes, such as capital spending rates and bed supply, through 1980. It then relates those outcomes to some of the program and environmental characteristics identified in Chapters 5 and 6. Chapter 8 looks at implications of the analysis in this book for hospitals, given several possible scenarios. Chapter 9 reviews the implications of the analyses for state and local policy makers in shaping their own programs. Finally, it examines state and local actions during the 1982 fiscal year- the "beginning of the end" for the federal mandate- and summarizes discussions of further change by Congress in 1982 in the context of prospects for the future.