Quasi-market

Last updated November 08, 2023

Quasi-markets are markets which can be supervised and organisationally designed that are intended to create greater desire and more efficiency in comparison to conventional delivery systems, while supporting more accessibility, stability and impartiality than traditional markets. Quasi-markets also can be referred to as internal or planned markets.^[1]

A market is a form of exchange mechanism of goods and services that is used to align supply and demand commonly by using the act of price adjusting. As such, a market also can be considered a self-adjusting financial incentive device that impacts the behaviour of each producer and purchaser so that both parties agree on the terms of an exchange. Quasi-markets are also an exchange system; they aim to comply with the characteristics of competitive markets by attempting to be self-correcting, inducement structures that impact purchasers and producers' behaviours. Quasi-markets differ, however, by possessing characteristics and aspects at both the supply and demand stages that are not shared in traditional markets.^[2]

Outsourcing in the public sector creates so-called Quasi-markets for services that are primarily funded by taxes. The phrase Quasi-market emphasises the distinction between markets for tax-financed services and typical markets, specifically that the consumed services are paid for by a third party—the government. The existence of political aims that would not be met in a free market is the normative rationale for the government to pay. Most democratic countries place a premium on equal access to education and healthcare. Paternalism is also present; resource redistribution is conditional on the consumption of some services having a 'public' component. The government frequently provides finance to a large number of vendors, who then compete to provide the service in a quasi-market. By forcing suppliers to compete for customers and funding, this competition is intended to promote efficiency and quality.^[3]

In the context of the supply, Quasi-markets are a market system, due to each producer competing to draw the maximum amount of consumers whilst competing with other producers. In the public sector, producers are often non-government companies (NGO's). Producers can also be segments or sectors of a specific firm that internally exchange their services inside a certain form of quasi-marketplace'; this is known as an internal market. it is important to acknowledge that internal markets are not open markets, this is because manufacturers with their goods and services will normally need third-party consumer permissions to enter a market.

In terms of demand,"Quasi-markets are structured to create and enhance consumer benefits and advantages, requiring producers to be responsive to the given alternatives. Inside the private sector's inner markets, pricing has a direct effect on internal resource allocation, although it does not directly have an impact on a firm's bottom line.^[4]

The implementation of a Quasi-market suggests that each purchaser and producer are separate entities and that there are multiple producers. This process in which some companies are given consumer status and the exclusive perks that come alongside such status and where the firms are given consumer status and fewer limitations and boundaries, and encouragement of self-governance is referred to as a purchaser-provider split.^[5]

Example

A notable example would be the NHS Internal Market introduced by the National Health Service and Community Care Act 1990: under this system, the purchase and provision of healthcare in the UK was split up, with government-funded GP fundholders "purchasing" healthcare from NHS trusts and district health authorities, who competed against one another for the fundholding GPs' custom. There was a marginal rise in the rate of increase in NHS productivity, to set against higher transaction costs, but healthcare remained free at the point of service and financed through taxation.^[6] Kenneth Arrow's famous essay "Uncertainty and the Welfare Economics of Medical Care" outlines the difficulties of applying principles of competition in the medical care industry.^[7] The system was regarded by some as a success: the 1997 Labour government did not entirely abolish it on taking office. GP Fundholding was abolished, but replaced by primary care trusts as purchasers of healthcare. As Klein says this was "universalising fundholding while repudiating the concept".

In October 2014 a row broke out over whether University Hospitals Birmingham NHS Foundation Trust should be allowed to turn away patients from outside its immediate catchment area. Chief Executive Dame Julie Moore said the NHS is neither an effective market nor a managed system. She argued that her hospital was suffering financially because of its success in attracting patients from outside the City.

Criticism

Quasi-markets have been criticised for a number of reasons, including the fact that they might not allow for fair competition between public and private operators and that they might lead to unequal access to services for more disadvantaged people or communities. As a result, cost-shifting may occur in quasi-markets as providers attempt to reduce their expenses and maximise their profits by moving the responsibility for providing care or services to other providers or the government. Quasi-markets can generate an administrative burden for governmental organisations, providers, patients, and students, particularly if there are numerous financing streams and providers to monitor. As a result, this will cost more money.^[8]

Critics of quasi-markets argue that they can lead to problems of so-called "cream skimming".

For example, the introduction of open enrollment in UK secondary schools after 1988 (whereby parents could choose which secondary school to send their child to, rather than being limited to the nearest) led to popular schools being oversubscribed. This allowed these schools to select which pupils they would accept, leading some to discriminate against children from low-income backgrounds or non-traditional family structures (e.g. inviting "both" of a child's parents to an informal meeting with the headteacher so as to determine by stealth whether the child comes from an "appropriate" family). Open enrollment also led popular schools to expand their intake, leading to the growth of very large schools with resulting discipline problems, at the expense of smaller schools and rural schools.^[1]

Related Research Articles

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Socialized medicine is a term used in the United States to describe and discuss systems of universal health care—medical and hospital care for all by means of government regulation of health care and subsidies derived from taxation. Because of historically negative associations with socialism in American culture, the term is usually used pejoratively in American political discourse. The term was first widely used in the United States by advocates of the American Medical Association in opposition to President Harry S. Truman's 1947 health care initiative. It was later used in opposition to Medicare. The Affordable Care Act has been described in terms of socialized medicine, but the act's objective is rather socialized insurance, not government ownership of hospitals and other facilities as is common in other nations.

A health system, health care system or healthcare system is an organization of people, institutions, and resources that delivers health care services to meet the health needs of target populations.

Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, value and behavior in the production and consumption of health and healthcare. Health economics is important in determining how to improve health outcomes and lifestyle patterns through interactions between individuals, healthcare providers and clinical settings. In broad terms, health economists study the functioning of healthcare systems and health-affecting behaviors such as smoking, diabetes, and obesity.

Publicly funded healthcare is a form of health care financing designed to meet the cost of all or most healthcare needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are set down in rules applying to the whole population contributing to the fund or receiving benefits from it.

The healthcare industry is an aggregation and integration of sectors within the economic system that provides goods and services to treat patients with curative, preventive, rehabilitative, and palliative care. It encompasses the creation and commercialization of products and services conducive to the preservation and restoration of well-being. The contemporary healthcare sector comprises three fundamental facets, namely services, products, and finance. It can be further subdivided into numerous sectors and categories and relies on interdisciplinary teams of highly skilled professionals and paraprofessionals to address the healthcare requirements of both individuals and communities.

Health insurance or medical insurance is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among many individuals. By estimating the overall risk of health risk and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization, such as a government agency, private business, or not-for-profit entity.

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Primary care trusts (PCTs) were part of the National Health Service in England from 2001 to 2013. PCTs were largely administrative bodies, responsible for commissioning primary, community and secondary health services from providers. Until 31 May 2011, they also provided community health services directly. Collectively PCTs were responsible for spending around 80 per cent of the total NHS budget. Primary care trusts were abolished on 31 March 2013 as part of the Health and Social Care Act 2012, with their work taken over by clinical commissioning groups.

Healthcare in the United Kingdom is a devolved matter, with England, Northern Ireland, Scotland and Wales each having their own systems of publicly funded healthcare, funded by and accountable to separate governments and parliaments, together with smaller private sector and voluntary provision. As a result of each country having different policies and priorities, a variety of differences have developed between these systems since devolution.

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<span class="mw-page-title-main">National Health Service (England)</span> Publicly-funded healthcare system in England

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The National Health Service in England was created by the National Health Service Act 1946. Responsibility for the NHS in Wales was passed to the Secretary of State for Wales in 1969, leaving the Secretary of State for Social Services responsible for the NHS in England by itself.

The Health and Social Care Act 2012 is an act of the Parliament of the United Kingdom. It provided for the most extensive reorganisation of the structure of the National Health Service in England to date. It removed responsibility for the health of citizens from the Secretary of State for Health, which the post had carried since the inception of the NHS in 1948. It abolished primary care trusts (PCTs) and strategic health authorities (SHAs) and transferred between £60 billion and £80 billion of "commissioning", or healthcare funds, from the abolished PCTs to several hundred clinical commissioning groups, partly run by the general practitioners (GPs) in England. A new executive agency of the Department of Health, Public Health England, was established under the act on 1 April 2013.

The National Health Action Party (NHA) is a political party in the United Kingdom.

Private healthcare in the UK, where universal state-funded healthcare is provided by the National Health Service, is a niche market.

The NHS internal market was established by the National Health Service and Community Care Act 1990, to separate the roles of purchasers and providers within the National Health Service in the United Kingdom. Previously, healthcare was provided by regional health authorities which were given a budget to run hospitals and community health services in their area. The Health and Social Care Act 2012 was intended to open up the internal market to external competition. The 2019 NHS Long Term Plan called for the establishment of integrated care systems across England by 2021, effectively ending the internal market.

The private provision of NHS services has been considered a controversial topic since the early 1990s. Keep Our NHS Public, NHS Support Federation and other groups have campaigned against the threat of privatisation, largely in England.

References

1 2 Lewis, Paul. (2017). Quasi-markets: An Overview and Analysis
↑ Carey, Gemma; Malbon, Eleanor; Green, Celia; Reeders, Daniel; Marjolin, Axelle (2020-01-02). "Quasi-market shaping, stewarding and steering in personalization: the need for practice-orientated empirical evidence". Policy Design and Practice. 3 (1): 30–44. doi: 10.1080/25741292.2019.1704985 . S2CID 214424506.
↑ Jordahl, Henrik (19 December 2019). "Perspectives on Public Sector Outsourcing: Quasi-markets and Prices". CESifo Economic Studies. 65 (4): 343–348. doi: 10.1093/cesifo/ifz015 . Retrieved 2023-04-23.
↑ Grand, Julian Le; Bartlett, Will, eds. (1993). Quasi-Markets and Social Policy. doi:10.1007/978-1-349-22873-7. ISBN 978-0-333-56519-3.
↑ Jordahl, Henrik (2019-12-01). "Perspectives on Public Sector Outsourcing: Quasi-markets and Prices". CESifo Economic Studies. 65 (4): 343–348. doi: 10.1093/cesifo/ifz015 . ISSN 1610-241X.
↑ Klein, Rudolf (27 November 1999). "Markets, politicians, and the NHS". British Medical Journal. 319 (7222): 1383–4. doi:10.1136/bmj.319.7222.1383. PMC 1117121 . PMID 10574834.
↑ Arrow, Kenneth (December 1963). "Uncertainty and the Welfare Economics of Medical Care" (PDF). American Economic Review. LIII (5).
↑ Valkama, Pekka; Kankaanpää, Jari; Anttiroiko, Ari-Veikko (June 2018). "Financial and structural impacts of quasi-marketization of the Helsinki Metropolitan Area's bus services". Case Studies on Transport Policy. 6 (2): 246–256. doi: 10.1016/j.cstp.2018.04.002 . S2CID 55793724 – via Elsevier Science Direct.

Quasi-market

Contents

Example

Criticism

See also

Related Research Articles

References

Further reading