Pricing, demanders, and the supply of health care

Medical savings accounts in a universal system: wishful thinking meets evidence

Medical savings accounts (MSAs) and similar approaches based on flowing reimbursements through individuals/consumers rather than providers are unsuited for systems with universal coverage. Data from Manitoba, Canada reveal that, because expenditures for physician and hospital services are highly skewed in all age groups, MSAs would substantially increase both public expenditures and out-of-pocket costs for the most ill. The empirical distribution of health expenditures limits the potential impact of many current 'demand-based' approaches to cost control. Because most of the population is relatively healthy and uses few hospital and physician services, inducing the general population to spend less will not yield substantial savings.

Distributive effects of dental programs for old-age pensioners in Norway

The purpose of the present paper was to study the distributive effects of different delivery models of dental services to old-age pensioners in the county of Troms in Northern Norway. The empirical basis was formed by a baseline survey at the start of a 50% demand subsidy in 1975/76, and from a delivery experiment along a "market-need" dimension which was started in 1978 and lasted for 1 yr in three research areas (Municipalities). In the control area there was no intervention beyond the 50% demand subsidy, while the two experimental areas differed with regard to improvements of the market mechanism in terms of increasing degree of collective decisions as to which treatment needs should come to treatment. The aggregate consumption of dental services was relatively unaffected by a reduction in the price of dental treatment. The improvements of the market contributed to a net gain in use rate from 16% to 23%, while moving towards the "need" end of the "market-need" dimension. By minimizing the market mechanism, the use of dental services expanded and the cost of the programs increased, but whether the inequalities diminished could not be decided empirically.

The social consequences of free trade in health care: a public health response to orthodox economics

In recent years, difficulties in U.S. health services have been ascribed to excessive government intervention and regulation; high costs and other problems would be solved, it is argued, by "return to the free market and competition." Examination of the past operations of free trade and competition in health care, however, shows that in this market not one of at least five conditions necessary for effective competition exists. Numerous adjustments made by social reflect strikingly the problems caused by these market deficiencies (such as seriously inadequate information or the presence of social "externalities"). Furthermore, even these adjustments-such as medical ethics or health insurance-have generated serious secondary problems. Many types of waste and social inequity also persist, in spite of all the attempts to compensate for market failure. In effect, the so-called free market in health care has survived only because of the extensive regulations and other actions taken to patch it up. Abandoning these adjustments would further aggravate current problems. Only replacement of free trade by systematic social planning could hope to achieve a health care system that allocates resources and distributes services both efficiently and equitably.