Abstract

Health care markets are typical examples of market failure, leading to relevant public regulation. In the last decade, the sector was widely reformed in many countries due to a growth of health care expenditure overwhelming economic growth. A common feature of the reforming process is the introduction of competitive elements in the market of care delivery. In Italy, the reforms of the nineties which introduce managed competition, seem not to be able to rationalize the market on the costs side. The paper argues that the reasons for this are the faults of reforms in separating purchaser and provider roles: local public health authorities act as purchasers of care from private providers, while contemporaneously delivering health care. Consequently the market does not properly function: short time budget constraints prevail over the search for long term efficiency, thus creating adverse effects. We conclude that, while at an international level the most relevant goal is market efficiency and market liberalization does not seem to be a relevant issue, this is not the case in the Italian context where the purchaser/provider split remains a necessary condition for achievement of market efficiency.