The role of tax exemption in a competitive health care market

The Federal Trade Commission and Department of Justice 2004 report on competition in health care raises the issue of nonprofit versus for-profit form in several contexts, including their relative financial performance, pricing behavior, and role in caring for the uninsured poor. The report, however, does not discuss in detail the connection between tax exemption and the nonprofit/for-profit debate. Is tax exemption, for example, "buying" charity care for the poor, and would withdrawal of exemption negatively impact health care for the uninsured poor? Or is tax exemption justified on the grounds of other nonprofit behavior outside the financial realm and thus not considered by the report? If nonprofit status does not result in differential financial behavior (as the report concludes) and if competition will end the ability of hospitals to cross subsidize free care for the poor (as the report speculates), is there any reason to retain tax exemption for nonprofit hospitals? This article summarizes the debate on these issues and offers some alternatives to the current structure of tax exemption for nonprofit health care providers.     

Predatory bidding in competitive tenders: A Swedish case study

Public procurement by competitive tendering is an important part of European policies to encourage competition in network industries previously dominated by public companies. In recent years, the appearance of very low bids has become an issue in several countries. We discuss predatory bidding from a theoretical, practical and legislative point of view. A case of tendering for train services in Sweden is used to illustrate the possibilities to detect an abnormally low bid. An analysis of projected costs and revenues is complemented with a method using historical data on previous tenders. One conclusion is that there is scope for reform in national competition policies in European Union member states concerning multinational enterprises participating in local tenders. JEL Classification K21 · K23 · L12 · L43 · L92     

Halfway competitive markets and ineffective regulation: the American health care system

Since the late 1960s the U.S. has attempted to develop a strategy for controlling the rate of growth of health care spending. During the 1970s this strategy relied heavily on various forms of regulation. Some regulatory programs were partially successful in moderating spending increases, but they generated significant opposition--particularly from powerful provider groups, who successfully convinced Congress and the states to dismantle most of the regulatory structure and to substitute various forms of competitive approaches to controlling spending. Some of these competitive strategies have been successful in increasing the efficiency of subsections of our health system. But they too have produced "losers," and the government has been pressured to enter the system to minimize their losses. The net result has been a political stalemate between halfway competitive markets and ineffective regulation. With the rate of health care spending growth near historic levels, it is likely that the 1990s will bring a return to a stronger role for government regulation. But it is unlikely that we are any more willing to tolerate the negative fallout from regulation today than we were in the 1970s, and therefore we predict that the proportion of GNP going to health care will continue to grow throughout the remainder of this century.     

The Florida Health Care Access Act: a blended regulatory/competitive approach to the indigent health care problem

The problem of indigent health care has received much attention from governmental officials, health care providers, health policy analysts, and others. A majority of states have generated legislative proposals to deal with the problem, although their strategies differ in terms of method and scope. This article discusses Florida's approach to the problem as contained in the Health Care Access Act of 1984 and subsequent legislation. The article will provide background on the reasons a hospital assessment strategy was chosen as the funding mechanism and will examine the problems that occurred during the implementation phase of the legislation.     

Taking action to contain health care costs---Part II

Last month, Mr. Larson explained some large corporations' methods of saving health care dollars within existing corporate roles. This month, he outlines what companies are capable of doing, once certain organizational barriers are removed.     

Equity,health, and health care

Equity goals, such as equal treatment for equal need or equality of access, commonly take pride of place among the aims of health policy. But do these conceptions, or others derived from more fundamental philosophical systems such as those of the utilitarians or John Rawls, successfully capture the way in which the term equity is generally used? If not, is it possible to find some interpretation that can command a greater consensus? This paper answers no to the first question and yes to the second. It is argued that the standard conceptions of equity ignore the processes by which health states are determined and hence the extent to which they arise from factors beyond individual control. An alternative conception is proposed that directly incorporates these considerations.