1. IntroductionOne of the hottest issues in the United States today is the ever-increasing trend in healthcare spending. There are heated debates about the role of government and insurance companies and possible solutions. However, little is known about the experiences and results of previous attempts to limit health spending. However, during the long tradition of rising healthcare costs, a temporary break occurred in the 1990s. The period of this hiatus actually corresponded to the period of the “managed care revolution.” The time when special types of health plans aimed at reducing healthcare costs (managed care) expanded greatly. By the late 1990s, nearly 90% of the U.S. population participated in some form of managed care. But managed care's unique features—limited choice, fixed wages, and lower prices—were not welcomed by everyone. Public opinion, the media and politicians turned against managed care and the late 1990s were characterized by a negative reaction to managed care. Managed care has been accused of paying little attention to patients in order to save costs for institutions. For this reason, the cost containment activities of these institutions have been significantly limited by states. Although we do not know the exact effect of healthcare institutions on healthcare quality and prices, they are not considered a possible solution to increase healthcare spending. To fill this gap I have collected the most important theoretical and empirical investigations on the impact of managed care. The structure of my article is as follows. I first identify trends in healthcare costs over time, compared to other countries. Then I present a survey of possible health care costs…middle of the paper…health care trends. I found that while previous theoretical analyzes did not attribute cost stagnation to the managed care effect, more recent estimates find strong evidence of its price-reducing effect. The most recent studies could take into account all the peculiarities and systematic differences between Managed Care and traditional insurance companies. For this reason, Pinkovsky's findings are the most reliable evidence on the impact of HMOs. If we accept the price-reducing effect of managed care, states should reduce regulations of managed care institutions. However, better information of the population and healthcare stakeholders is crucial to avoid previous misinterpretations. Furthermore, managed care institutions must be incentivized to create contracts that are available and acceptable even to less healthy people.