Abstract
The use of competition and the associated increase in choice in health care is a popular reform model, adopted by many governments across the world. Yet it is also a hotly contested model, with opponents seeing it, at best, as a diversion of energy or a luxury and, at worst, as leading to health care inequality and waste. This paper subjects the use of competition in health care to scrutiny. It begins by examining the theoretical case and then argues that only by looking at evidence can we understand what works and when. The body of the paper examines the evidence for England. For 25 years the United Kingdom has been subject to a series of policy changes which exogenously introduced and then downplayed the use of competition in health care. This makes England a very useful test bed. The paper presents the UK reforms and then discusses the evidence of their impact, examining changes in outcomes, including quality, productivity and the effect on the distribution of health care resources across socio-economic groups. The final section reflects on what can be learnt from these findings.
Highlights
The health care sector is characterised by expenditure growth over a long period, driven by a combination of population change and income growth on the demand side and innovation on the supply side
It should be acknowledged that the evidence is often treatment specific and only a relatively narrow set of treatments have been examined, many of which are elective services
The evidence presented here suggests that they have scope to improve health care delivery
Summary
The health care sector is characterised by expenditure growth over a long period, driven by a combination of population change and income growth on the demand side and innovation on the supply side. In the European context, the United Kingdom has been a pioneer in opening up previously heavily regulated and centralised public services to competition. This paper examines what can be learnt from the UK experience in using competition and the associated change in consumer choice in hospital services to improve health care outcomes. The review primarily marshals evidence which is derived from primarily from administrative data and within that evidence that employs research designs that attempt to control for other policy changes that occurred alongside the pro-competitive reforms. Few of the studies provide a full welfare analysis of these policies: instead they examine whether and how providers and users of health care responded to the change in incentives created by the pro-competitive reforms.
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