Quality of Care in Single-Payer and Multipayer Health Systems

In this article, I argue that unregulated markets will not find the right level of health care quality but that at the same time it is not clear that single-payer systems will do any better. My perspective combines the economic theory of public goods and the institutional payment arrangements found in many single-payer systems. If, as I believe, health care quality is a public good, it will be underprovided in a multipayer system. Single-payer systems often allocate a fixed budget to health care professionals or administrators and give them considerable discretion in determining quality as well as quantity of service. With care being free or almost free at the point of use, patients will demand more services than administrators want to provide. The result is rationing by waiting - which should be present in all such systems and is present in most of them. I develop several implications of the theory and an agenda for future research on quality of care in single-payer and multipayer health systems.