Health care competition has arrived. In the late 1990s, this observation has become a truism. Market changes have important effects for all consumers of health care but may especially affect traditional access to care for the low-income population.
The stimulus for market change has been buyers’ demands for less expensive health coverage and care. In insurance markets, managed care is displacing traditional, free-choice-of-provider indemnity coverage. Indemnity plans retrospectively paid provider-set charges or costs for almost all physician-ordered services from almost any provider. Managed care plans instead use selective contracting to negotiate price and other terms of service in advance—and can also reduce utilization in various ways. Growth in managed care, prospective payment by Medicare and Medicaid programs, and increasing medical capabilities to replace inpatient with outpatient care— all have contributed to substantial excess capacity for hospital and specialist physician services in many markets. Ample supply has increased buyers’ leverage over sellers in many areas.