Incentives vs. Controls in Health Policy: Broadening the Debate

By Jack A. Meyer; American Enterprise Institute for Public Policy Research | Go to book overview

nues to permit providers to cover their reasonable costs. If "underpaid" providers boycott Medicaid, for example, beneficiaries will often seek primary care in high-cost and inappropriate settings. In this case, suppression of prices leads to both false economies and an adverse effect on access to care.

Finally, and closely related to quality, society must decide how much health care is to be financed for the poor. Policy makers must make difficult choices that bring expectations and promises into balance with resources. The amount of health care available, even from an efficient configuration of suppliers, depends on adequate revenues. In areas where multiple pricing exists (for Medicare, Medicaid, and private paying patients), cost shifting may disguise and forestall the need for an answer to this question. It may even lead to tiered medical markets serving these different populations. 27 Policy makers must deal with both the economic and the moral issues of who should receive life-extending procedures and other forms of high-technology treatment that are exceedingly expensive under any delivery system.

Regardless of the answers to any of these difficult issues, the policies established should offer providers and consumers incentives to make efficient choices about health production and consumption. Flexibility for the development of integrated supply organizations must be maintained to achieve these goals.


Notes
1.
Mark V. Pauly, "Paying the Piper and Calling the Tune: The Relationship between Public Financing and Public Regulation of Health Care," in Mancur Olson, ed., A New Approach to the Economics of Health Care ( Washington, D.C.: American Enterprise Institute, 1981), pp. 67-86.
2.
Richard Zeckhauser and Christopher Zook, "Failures to Control Health Costs: Departures from First Principles," in Olson, A New Approach, pp. 97- 116.
3.
Paul J. Feldstein, Health Care Economics ( New York: John Wiley and Sons, 1979).
4.
J. M. Scott, "Federal Support for Nursing Education to Improve Quality of Practice," Public Health Reports, vol. 94, no. 1 ( 1979), pp. 31-35.
5.
R. M. Scheffler et al., "Physicians and New Health Practictioners: Issues of the 1980's," Inquiry, vol. 16 ( 1979), pp. 195-229.
6.
American Medical Association, Center for Health Services Research and Development, Profile of Medical Practice, 1980 (Monroe, Wis., 1980).
7.
Zeckhauser and Zook, "Failures to Control."
8.
Ibid.
9.
C. Watts and G. Updegraff, Regulation and Capital Expenditures ( Denver: Spectrum Research, 1975).
10.
W. J. Bicknell and D. C. Walsh, "Certificate of Need: The Massachusetts"

-130-

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