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Healthscare 2: GATS will lead to new private
healthcare monopolies
Some opponents of
healthcare liberalization say that a steady erosion of the public monopoly
on healthcare will undermine state provision altogether and give rise to new
private monopolies.
“There are growing
concerns that GATS will lead to the full scale privatisation of public
monopolies across the world.”
Nick Mathiason, The
Observer Oct 13th 2002
Again, opponents
overstate their case. There is no evidence that the introduction of consumer
choice in healthcare results in the wholesale privatisation of state-owned
monopolies.
In many countries,
state and private provision coexist. They will continue to do so after
liberalization because in countries where state provision exists there will
always be some take-up of these services.
Private monopolies in
healthcare only tend to arise in situations where there is one or only a
small number of purchasers. For
example, where a government is the sole purchaser of services, it may award
a contract for a defined period to undertake, say, prosthetic operations to
a single private hospital group. As
a result of winning this initial contract, the private hospital group may
find it is able to buy up or drive away the competition it originally faced,
and thus be in a monopoly position (and able to raise its prices) when
bidding for a new contract takes place.
The possibilities of
private monopolies arising diminish where purchasers are many and varied.
Where a company attempts to offer a healthcare service at a price which
would deliver monopoly profits, some purchasers – be they insurance
companies, provident associations or individuals - will look for a cheaper
alternative. Where one does not exist, they will tend to use their
resources to set up an alternative service.
The
distinguishing feature of liberalized healthcare systems is competition
between providers. GATS
presents no danger of any public monopoly being replaced by a private one.
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