Competition and Health Care Policy: Experience and Expectations

Abstract

Since 1970 federal policymakers have tried to strengthen competition and incentive-based market forces as alternatives to regulation in containing health costs. The effort to stimulate the growth of health maintenance organizations (HMOs) throughout the country has had limited results, and federal plans to promote competition by enacting changes in the health insurance market have so far come to little. Coalitions in some localities have shown growing interest in flexible HMO variants, however, and the intellectual force of the HMO critique of mainstream practices remains strong. Moreover, the federal government has shown new interest in prospective reimbursement of hospitals—a proposal that draws from both HMOs—competition—and hospital rate-setting programs—regulation—the element of prospectivity.

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References

1. On this and other topics addressed in this article, see Lawrence D. Brown , Politics and Health Care Organization: HMOs and the Federal Government (Washington, DC: Brookings Institution, 1983).

2. Charles O. Jones . Clean Air: The Policies and Politics of Pollution Control (Pittsburgh: University of Pittsburgh Press, 1975), p. 176.

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8. For example, Katherine G. Bauer , “Hospital Rate-Setting—This Way to Salvation?” in Hospital Cost Containment: Selected Notes for Future Policy, ed. Michael Zubkoff , Ira E. Raskin , and Ruth S. Hanft (New York: Prodist, 1978), pp. 324-369.

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10. Washington State Hospital Commission , Annual Report: 1980 Fiscal Year (Olympia, WA: Washington State Hospital Commission, 1981), pp. 8-11.

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