This report reintroduces state-based hospital rate setting as an approach to addressing increasing prices and hospital market power. It details what rate setting is and how it works, discusses the record of rate setting in the states that operated rate setting programs , examines in depth the programs that have persisted in West Virginia and Maryland, discusses the lessons learned from these systems, and describes the ambitious approach now being implemented in Maryland. In this new all-payer demonstration, the state will to move from approving rates for hospital services to setting budgets for hospitals and ultimately all health care spending.