(FORTUNE Magazine) – Get ready for Act II of Clintonomics -- the First Lady's task force on health care. A key question: Will Hillary emulate Hammurabi, the Babylonian ruler who slapped on history's first-recorded price controls? President Clinton likes managed competition, in which HMO-like health plans would battle for patients and root out inefficiency. But during the campaign he also called for ''global budgeting'' -- a limit on total spending -- to rein in the country's health bill. Congress might well gag on this kind of regulation, but how do you choke off a hemorrhage that could account for half the federal deficit between now and the year 2000, while simultaneously extending coverage to the 35 million uninsured? Sociologist Paul Starr of Princeton University, a task force member, seems to favor a half-pregnant system -- market driven yet price controlled. In Starr's blueprint, federal czars would limit spending by using the most efficient health plans as a benchmark and then fixing a ''maximum allowable rate of increase'' to annual premiums. People could join costlier plans, but Starr would discourage this by capping the tax exclusion workers get on health insurance premiums their employers pay. Others would limit the deductibility the employer gets. Many health reformers urge some version of a cap, figuring that wildly generous plans will perish if deprived of an unlimited tax subsidy. But why peg prices, they ask, when evidence mounts that market forces could cut health costs as they have airfares? In California the state's Public Employees Retirement System just negotiated amazingly small increases, averaging 1.4%, for the health care plans of 887,000 active and retired employees and their dependents. Says Tom Elkin, who administers the agency's health benefit programs: ''I don't believe a global budget or limit on increases would have been useful.'' If the government were to allow, say, a 4% or 5% raise, he argues, ''that would tend to become the floor'' under premium increases. In fact, a new study by HCIA, a Baltimore research company, shows that hospital rates rise faster in states with rigid price controls. Many on Mrs. Clinton's task force realize the dangers. The trouble is, says Dr. Paul Ellwood, president of the Jackson Hole Group of health reformers, ''that while there's a lot of high-level skepticism about the effectiveness of price controls as economic devices, there's too much enthusiasm for them as political devices.'' Hammurabi lives.

CHART: NOT AVAILABLE CREDIT: O'CONNELL FOR FORTUNE/SOURCE: CONGRESSIONAL BUDGET OFFICE CAPTION: SKYROCKETING HEALTH CARE COSTS