Competition and Primary Care in the United States: Separating Fact from Fancy

Abstract

Competitive strategies have been advocated as the solution for the economic ills of the U.S. economy. During the 1980s many economists and health care practitioners are arguing that a competitive strategy will bring down health care costs; these plans emphasize the existence of perverse incentives which reward cost reducing behavior with less revenue. Competitive strategies assume the existence of a “health care marketplace.” Historically, the United States health care sector has not conformed to the ideal of the competitive market because of the special characteristics involved in the production and consumption of health care. Consumers have the least power in the health care sector and yet most competitive proposals are explicitly directed at changing consumer behavior, especially in the area of primary care. Much evidence indicates that competitive plans inhibit consumers from using primary care services, increase long-term health care costs, and ultimately require more government regulatory action.