The last several decades of health law and policy have been built on a foundation of economic theory. This theory supported the proliferation of market-based policies that promised maximum efficiency and minimal bureaucracy. Neither of these promises has been realized. A mounting body of empirical research discussed in this Article makes clear that leading market-based policies are not efficient — they fail to capture what people want. Even more, this Article describes how the struggle to bolster these policies — through constant regulatory, technocratic tinkering that aims to improve the market and the decision-making of consumers in it — has produced a massive market bureaucracy.
To illustrate the growth the of market bureaucracy, this Article traces the origin and development of several market-based theories that have been central to the modern era of health law. The first, called managed competition, looks to consumerism in insurance markets and contends that people will choose wisely among health plan options, and their choices will drive higher value health care. The second relies on consumerism when using medical care. Sometimes called consumer-driven health care, the notion is that when people are subject to a share of the costs, they will more selectively choose when and where to use medical care and will avoid low-value care. The final example considers the application of antitrust to health care mergers, ostensibly to create a competitive field on which consumerism can flourish.
This Article shows that, in application, none of these ideas has, nor will ever, deliver as imagined in a world that deviates from theory. Nonetheless, they continue to spawn a vast web of health law regulation in their support. The cost of this market bureaucracy includes the scaffolding to hold up an ineffective market-based structure and, more importantly, the opportunity cost of driving out better alternatives to solving important health care challenges.
Health care’s market bureaucracy endures in light of this failure in part due to politics and political economy, a point others have illuminated well. Yet, this Article suggests that it persists equally because of its elevation of values of individualism and choice. Choice is especially appealing when it comes to decisions about our health, where we want to believe we are in control, but choice has proven empty as conceived. Understanding that markets do not actually enhance choice—and are as bureaucratic as any other approach — can clear the way to ask how to design health law and policy that better produces what the polity genuinely values.
Hoffman, Allison K., "Health Care's Market Bureaucracy" (2019). Faculty Scholarship at Penn Law. 2085.
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