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Saint Louis University Journal of Health Law & Policy

Document Type

Symposium Article

Abstract

In health care, the increase in market concentration on both the insurer side and the provider side has led to insurers and providers acquiring market power. Insurers and providers, in turn, have used that market power to charge higher prices to employers providing employees with medical care without corresponding increases in the quality of that care. Responding more generally to the increase in market concentration in many industries in the United States with a range of inimical effects for the nation’s economy, the Obama Administration suggested a range of policy solutions that this article groups under the term “Competition as Policy Reform.” These solutions included the use of vigorous antitrust enforcement to restore competition, the use of market incentives to stimulate existing competition, and the promulgation of market-governance rules to jumpstart new competition. This article explores in detail whether and how competition as policy reform can be instituted in health care. It first discusses what vigorous antitrust enforcement can and cannot do to combat the use of market power by health care actors in more concentrated markets. Recognizing that the enforcement of antitrust law can, at best, restore the status quo ante in terms of competition in a market victimized by anti-competitive conduct, this article also explores two other solutions: (1) the use of market incentives to stimulate competition and (2) the promulgation of market-governance rules to jumpstart competition. This article finds that competition as policy reform can be instituted in health care as an alternative to other proposed policy solutions, such as applying the regulated utility model. Ultimately, it also finds that the individual states—as laboratories for experimentation in our federalist system—can play a key role in the endeavor to use competition as policy reform in health care.

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