This paper seeks to clarify so-called competition strategies for medical care, and to present a more flexible approach for public policy to encourage competition. In so doing, it appears useful to divide a competition strategy into two parts: (1) a structurally sound market model for the future medical delivery and financing system, and (2) a strategy to implement the chosen model. Policymakers may choose any model that satisfies the structural conditions of a sound market. After listing these principal conditions, this paper presents two distinct market models that satisfy them in entirely different ways and a third model that combines the first two.

Once a specific market model is chosen, policymakers may choose among a variety of ways to implement it. Some implementation strategies require coercive legislation, others rely more on persuasive leadership, pressures, and incentives. The paper points out that all of these strategies must address certain common action areas; it then proposes one implementation strategy in some detail and uses it to illustrate a way to address each of these areas. Although it certainly is not the only possible strategy, the proposal would appear to be a practical approach for implementing effective competition.

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