Market-oriented cost-containment strategies and quality of care.

medical care services that has been suggested by politicians, by academicians, and most recently by the business community is to increase the influence of market forces on medical care decision-making. While the potential for success of this approach in achieving its aim of cost containment has been much discussed, the related question of what effects it may have on quality of care has received no systematic treatment. To begin filling this gap, this paper examines the implications for the quality of medical care of some general proposals designed to reduce health care expenditures by increasing the influence of market considerations in medical care decision-making. The proposals evaluated are represented by the work of Feldstein (1971), Pauly (1968, 1980), Enthoven (1978), and McClure (1978). These proposals principally depend on increasing cost-consciousness on the part of decisionmakers in the medical care process. These decisionmakers include the consumer (or patient), the provider, the insurer, and, in some cases, the employer. Further, increased costconsciousness may come at three decision points: 1) at the point of deciding what insurance policy to buy or which health care plan to

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