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Privatization and Bidding in the Health-Care Sector

Randall R. Bovbjerg, Philip J. Held and Mark V. Pauly
Journal of Policy Analysis and Management
Vol. 6, No. 4, Privatization: Theory and Practice (Summer, 1987), pp. 648-666
DOI: 10.2307/3323521
Stable URL: http://www.jstor.org/stable/3323521
Page Count: 19
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Privatization and Bidding in the Health-Care Sector
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Abstract

Public provision of health care, as under Medicare and Medicaid, traditionally "privatized" major production decisions. Providers of care, largely private physicians and hospitals (but also public hospitals), made significant decisions about public beneficiaries' access to care, the quality and quantity of individual services, and the prices to be paid. The result was high access and quality/quantity, but also high program spending, which has prompted a reassertion of public budgetary control. Newly activist program administration is using various mechanisms to promote economizing. Unable and unwilling to specify standards of public access or quality/quantity too overtly, administration instead seeks to squeeze prices--mainly through administrative price setting but also through competitive bidding and voucherlike arrangements. Under such new incentives, major choices that in many non-American systems would be public are here "reprivatized" to be resolved out of the limelight by beneficiaries, traditional providers, or new intermediaries like Competitive Medical Plans.

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