What Works in Market-Oriented Health Policy?

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Abstract
There is a widespread belief, embraced by President Barack Obama as well as congressional and industry leaders, that the next round of health care reform should leverage market forces to lower the cost of care and improve its quality. The use of market forces in health policy typically involves altering out-of-pocket prices and information for consumers (the demand side) and incentives for providers (the supply side). Such market-oriented reforms — policies that alter the economic environment in which consumers and providers make health care choices in pursuit of their individual interests — can be implemented even in highly regulated settings. The main question is how to design these interventions to improve the medical system, without harmful side effects (see table ).