Side Effects: A Dose of Competition and Access to Care

The Federal Trade Commission and Department of Justice 2004 report Improving Health Care: A Dose of Competition argues in favor of increasing competition among health care providers. Several of the proposals within the report, however, may pose risks for access to care. The report urges that the current system of implicit cross-subsidies for indigent care be replaced with insurance expansions that provide coverage to individuals. Such a substitution would certainly enhance access, but would be very costly and likely require considerable government intervention in the health care system. In the absence of a substantial expansion in coverage, reductions in cross-subsidies could limit access to care through the existing safety net. The report argues that insurance mandates limit access to care by driving up cost and reducing choice. In some cases, such as mental health and substance abuse, however, the unregulated market may not cover a benefit at all, leaving people with less coverage and less choice. Finally, the report stresses the importance of linking costs to quality. Such a linkage is likely to lead to a health care system in which poor people obtain poor-quality care at low prices—a result that many would find disturbing.