Saturday, 16 April 2011

Competition in the Health Care Sector [in USA]

This is an extract from the book ‘Competition in the Health Care Sector: Ten Years Later’ edited by Warren Greenberg and published in 1988 and deals with the USA health care system.

Warren Greenberg, Ph.D. is a professor of health economics and health care sciences and a senior fellow with the Center for Health Policy Research at the George Washington University. He is also a scholar in residence at the Agency for Health Care Research and Quality.

The following extract is from the introduction by Warren Greenberg.

“It appears that competition has increased substantially among providers and among insures and health plans since 1977, perhaps more than anyone predicted or though possible. Economic theory would suggest that this increase in competition should have resulted in a more efficient allocation of health care services. The distribution of health care services is still markedly unequal, however. At least 37 million individuals are without health insurance (versus 27 million in 1977), and it appears to be increasingly difficult for someone who is chronically ill to obtain individual health insurance. As in other sectors of the economy, it is clear in the health care sector that a more efficient allocation of resources alone can never solve an equity concern.

The increase in competition has also been unsuccessful in containing health care costs. The rate of increase in health care costs continues to exceed the rate of increase in all consumer or producer prices. This is not surprising. An improved allocation of resources may result in a one time reduction in health care costs, but competitive industries are at least as prone as monopolistic industries to experience increases in cost over time. In addition, the increased development and diffusion of higher-cost health care technology appears to be immune to structure considerations.”

Read more of the book at Google Books

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