Commentary--Sociological Perspectives on Competition in Health Care

All societies have organizing accounts--what anthropologists call myths--about the nature of their social institutions, how they came to assume their current accomplishments and troubles, and what needs to be done to overcome those troubles. These myths, sometimes called accounts or ideologies, are often used by institutional and political leaders to guide and explain their policies or decisions and may in fact be quite different from the accounts they give. Both those who profit and those who suffer from these actions understand their riches or plight as "the way the world works." The seers who teach, elaborate, and sometimes overthrow modern myths are often professors.

From a comparative sociocultural point of view, "competition" is a dominant myth or ideology in modern society that is used to explain and justify how economic activity is organized. As an organizing ideology, competition is socially radical because it encourages individuals and institutions to do whatever they can to maximize their own gain, and it deplores government, even democratic forms of governing social life, as inefficient impediments to "unfettered competition" and "free markets."

The compelling promise of competition is that the energy and imagination unleashed by maximizing individual gain will increase the wealth and power of the society as a whole, though beneficial competition only occurs if a number of conditions or restrictions are in place.

Otherwise, this unleashing of selfish pursuits benefits insiders and or exploits outsiders in a number of schemes to make easy profits, rather than going head-to-head with competitors. In fact, there is little or no unfettered competition, and there are no "free markets" because societies set limits on what can be competed over and how. These limits, or regulations, often concern safety and exploitation of unwitting customers, though different societies at different times set more relaxed or restrictive limits. Amitai Etzioni (1988) has effectively shown that all forms of beneficial competition depend heavily on a foundation of norms, rules, laws, and social institutions that complement or buffer competitive markets. Even successful and wealthy nations vary considerably in how much competition they allow, and in what domains. Sweden and the United States come to mind.

A peculiar application of competition as a guiding ideology took place in the last quarter of the twentieth century, when prominent academic seers declared in a growing chorus that competition would rein in the rising costs of modern medicine. This was most strange, because prominent economists of an earlier generation had concluded that health care fails to satisfy several requirements for beneficial competition (see Light 1993, 2000). Diagnosis and treatment are too often emergent, contingent, and uncertain, property rights too often blurred, and roles confounded, such as when the provider becomes the consumer's trusted adviser. Moreover, competition has an impressive record of spurring economic growth, not stopping it. In the short run, competition rewards efficiency if there are not more appealing options such as featuring a new version of a drug that a patient need only take once a day rather than three, or an MRI that replaces its clanking closed chamber with an open one. In these short-run cases and always in the long run, competition rewards those who innovate, who create "needs" that never existed before and who open new markets, like the one for cell phones. Adam Smith's book was not called The Cost Containment of Nations.

Why, then, did this belief in competition as the way to contain health care costs become so widely embraced? Not because there was clear evidence of its working. In fact, many of the problems predicted to arise if competition were applied to health care did (Ashton 1998; Hsiao 1994; Light 1997, 2000). Clive Smee in his brief account in this issue of the problems that arose when the world's largest managed...