Chapter

The Third Wave in Health Care Reform

David M. Cutler

in Aging Issues in the United States and Japan

Published by University of Chicago Press

Published in print September 2001 | ISBN: 9780226620817
Published online February 2013 | e-ISBN: 9780226620831 | DOI: http://dx.doi.org/10.7208/chicago/9780226620831.003.0006
The Third Wave in Health Care Reform

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This chapter documents the trends in the Organization for Economic Cooperation and Development (OECD) medical systems over the past fifty years and the reasons for major changes in these systems. The world's medical systems have been in flux for most of the past fifty years. At first, countries built up their medical care systems. Coverage was made universal, and benefits were generous. There was little demand- or supply-side cost sharing. In the early 1980s, countries realized the unaffordability of generous demand incentives with no control over medical care supply. The typical response was to limit the supply side of the market by capping the total amount of services that could be provided. However, the strains in this approach ultimately became apparent. Excess demand led to waiting lists, non-pricing rationing, and the incentive to seek services outside the public sector. As a result, efficiency concerns rose in importance during the 1980s and 1990s. A focus on efficiency is likely to involve two reforms, which are characterized as the “third wave” of health care reform: increased competition for services, either at the level of the provider or at the level of the insurer; and increased patient cost sharing.

Keywords: OECD; medical systems; health care services; competition; cost sharing

Chapter.  6524 words.  Illustrated.

Subjects: Economic History

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