1. An Economic Perspective
Health Policy Issues
An Economic Perspective
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2. Chapter 20
Has Competition Been Tried—and Has It Failed—to Improve the US Healthcare System?
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3. LEARNING OUTCOME
Investigate medical markets—why they have not had the necessary conditions for competition to occur, how they differ from competitive markets, why competition is desirable and how to increase it, the relationship between competitive markets and the uninsured, and the role of government
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4. Lecture Criteria for Judging Performance of a Country’s Medical Sector
How Medical Markets Differ from Competitive Markets
The Period Before Managed Care
Exhibit 20.1
Managed Care
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5. Lecture (continued) Demand-Side Market Failures
Tax-Exempt Employer-Paid Health Insurance
Health Plan Choices
Lack of Information
Medicare and Medicaid
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6. Lecture (continued) Supply-Side Market Failures Provider Consolidation
State Regulations
Lack of Physician Information
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7. Lecture (continued)
How Can Medical Markets Be More Competitive? Are the Poor Disadvantaged in a Competitive Market? Patient Incentives Drive Price Competition in Government and Private Markets What Might Competitive Medical Markets Look Like?
continue to discussion
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8. Trends in Payment for Medical Services 1960–2012
Exhibit 20.1
Trends in Payment for Medical Services 1960–2012
return to lecture
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9. Discussion
Why is it said that competition in medical care has failed? What are the criteria for a competitive market? How well does medical care meet the criteria of a competitive market?
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10. Summary
Medical markets are not inherently different from other markets in their ability to efficiently allocate resources; it is their regulatory framework that leads to inefficient outcomes.
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11. Summary (Continued)
Medical markets differ from competitive markets in significant ways:
The tax treatment of health insurance lessens consumer incentives to be concerned about the price and use of medical services.
Consumers lack the necessary information and opportunity to make economic and medical choices.
Competition among suppliers is limited by laws barring market entry, restricting the tasks health professionals are permitted to perform, preventing price competition, and regulating market prices.
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12. Summary (continued)
These market failures have resulted in inefficiency, inappropriate care, less-than-optimal medical outcomes, and rapidly rising medical costs. Increased government regulation has been shown to worsen rather than improve market performance; yet government has an important role to play in setting the rules for competitive markets.
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13. Summary (Continued)
Market competition has not failed in medical care, it just has not had a full opportunity to work. Without competition, providers have no incentive to be efficient, innovate, invest in new facilities and services, improve quality, develop best practices and clinical guidelines, or lower prices.
Copyright © 2015 Foundation of the American College of Healthcare Executives. Not for sale.