How will we Complement the Market Principle with the Planning Principle in the Health Care Sector?

Although the final purpose of this research is to analyze the benefit of interaction between the market principle and the planning principle in the health care sector, this article, as the first step of this study, focuses on these three aspects,1) the transactions between physicians and insurers,2) an underwriting of medical insurance,3) the relationship between hospital ownership and opportunistic behaviors.<BR>The below contents are summary of this article.<BR>1) The planning principle (e. g. managed care) seems to be more effective than the market principle (e. g. traditional indemnity health plan) to control the moral hazard of physicians because of the saving monitoring costs. However the planning principle is not always better for the patients (or the insured). Whether the planning principle is better for the patients or not depends on whether insurers are faithful agents for them or not.<BR>2) We can find some countries, the health care systems of which are based on mainly the market principle (or the planning principle), introduce the counterpart principle in order to increase the efficiency of their performance. The rapid growth of managed care in the U. S. can be seen as the penetration of the planning principle into the market principle. The introduction of the concept “quasi-markets”into the NHS can be seen as the injection of the market principle into the planning principle.<BR>3) There is no advanced country without public security of medical care for the reason that private insurance might incur inequality and inefficiency due to its characteristics (risk selection, adverse selection, high transactions costs). The combination patterns of public security and private insurance vary equality and efficiency in the health care system.<BR>4) It is possible that health care providers will take an opportunistic behavior under the conditions in which the information asymmetry and the third party payers exist. Our careful survey of the studies about the relationship between hospital ownership and its behavior on the hypothesis that profit seeking motive will induce an opportunistic behavior, makes it clear that for-profit hospitals take more cream-skimming manners than non-profits.