Competition in the Market for Health Services and Insurance, with Special Reference to the United States

How do markets organize the production and financing of medical care? In most countries, governments play a dominant role in both functions, so little experience is available on which to judge the performance of the markets. An exception is the United States, which has permitted markets to furnish the bulk of services to the nonelderly population. However, as economists pointed out long ago (Kessel, 1959), medical markets in the United States were never an approximation of the economic concept of a competitive market; they contained both regulatory and monopoly elements. Recently, however, some changes have occurred in the U. S. system which may have made markets more competitive. What are these changes and what are the effects, good and bad, which they have had?