A Special Report on Regulating the Health Care Market

Special issue of "Health Services Research" on regulating the evolving market in health care delivery

In 1998, the journal Health Services Research (HSR) published a special issue devoted to recent research and scholarly thinking on the evolving role of federal and state regulation in the changing health care marketplace.

Key Results: Seven articles and a foreword make up the special issue:

  • Haas-Wilson and Gaynor review the implications of consolidation in health care markets for antitrust guidelines and their enforcement and discusses recent judicial decisions and empirical evidence on the effects of horizontal mergers and vertical integration.
  • Bernstein and Gauthier review the opposing perspectives of health care players and antitrust agencies on competition and the resulting difficulties in answering key questions.
  • Pauly analyzes the potentially harmful impacts on consumers of monopsony behavior by managed care plans; monopsony is a market situation where one buyer exerts a disproportionate influence on the market.
  • Greenberg presents a case study in which the central issue is the market behavior of vertically integrated systems involving both providers and insurers.
  • Hellinger describes the diversity and expanded scope of state antitrust activities in the health care industry.
  • Marstellar, Bovbjerg, and Nichols examine the operation and performance differences between for-profit and nonprofit organizations.
  • Ohsfeldt, Morrisey, Nelson, and Johnson examine the growth and determinants of state-level any-willing-provider and freedom-of-choice laws.

Key Recommendations

Overall, the articles reached these conclusions:

  • Managed care offers some benefits to consumers by lowering prices and improving coordination of care, but these lower costs often come at the expense of existing providers and may in fact lower the social welfare of consumers.

  • Continuing consolidation may improve efficiency in health care delivery but will increase the bargaining power of providers in relations to health plans.

  • State laws relating to provider cooperation, ownership conversion, provider rights to participate in developing networks, and patient rights to access providers may foster better care for patients, but also may be political mechanisms used by providers to insulate themselves from the vagaries of the marketplace.

  • Whether health market changes and regulatory actions ultimately benefit consumers is unclear and may take years to sort out empirically.

    Some 4,000 subscribers of Health Services Research received the issue. RWJF purchased an additional 2,000 copies to distribute to federal and state policymakers, legislative staff, and others in the health policy field.