Market structure and performance: evaluating the U.S. health system reform

First, U.S. health system evolution over the last several years is assessed and found to be in line with what could be anticipated from economic theory. The immature market appears to be giving way to the concentration and the oligopolies of the mature market. This is explained in a manner accessible to non-economists. Next, the performance of market competition as a vehicle for health system reform is assessed in the areas of cost containment, quality of care, access, research/education and social mission. Overall, results have not measured up to promise. Market competition has not succeeded in bringing U.S. health care costs in line with those of other industrialized countries. There is no evidence of sustained quality improvement. Market based reform has not expanded health insurance coverage but has rather, directly or indirectly, increased the number of underinsured and uninsured Americans. Medical research and education have suffered and medicine's social mission has declined. These failures could probably have been anticipated, in advance, had policy makers carefully examined economic theory concerning market evolution. While these are some reasons to be hopeful for market performance in the future there are also potential pitfalls. Non-market oriented policy alternatives for health system reform are worth considering based on the experiences of the states and other countries.