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rowth in health care spending

One method commonly used by both governments and private health insurers to control the growth in health care spending are limits to reimbursement to providers. How can these limits to reimbursement be viewed as the exercise of monopsony power? To prevent health care providers from prescribing more services it is often common to limit approval of services to health care recipients. How is this practice affecting recipients of Medicaid and Medicare?

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Governments, Private Health Insurers, Reimbursements and Medicare and Medicaid

Master's Level:

One method commonly used by both governments and private health insurers to control the growth in health care spending are limits to reimbursement to providers. How can these limits to reimbursement be viewed as the exercise of monopsony power? To prevent health care providers from prescribing more services it is often common to limit approval of services to health care recipients. How is this practice affecting recipients of Medicaid and Medicare?

Yes these limits can be viewed as exercise of monopsony power. Monopsony is a situation in the market where only one buyer faces many sellers. The point is that in a monopsony the buyer may dictate terms to its suppliers. In this case, the government imposes limits on amounts reimbursed to providers that are consistent with "economy and efficiency" The excuse given by the government is that in some states these revenues are being used to subsidize health care operations that have nothing to do with Medicaid. The single payer ...

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rowth in health care spending is discussed in great detail in this solution.

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