Quasi-market
Encyclopedia
A quasi-market is a public sector
institutional structure that is designed to reap the supposed efficiency
gains of free markets without losing the equity
benefits of traditional systems of public administration and financing.
A notable example would be the NHS
Internal Market
(introduced in 1990): under this system, the purchase and provision of healthcare in the UK was split up, with government-funded GP
fundholders "purchasing" healthcare from NHS Trust
s and District Health Authorities, who competed against one another for the GPs' custom. This led to increased efficiency, as hospitals now needed to offer procedures at lower costs in order to win patients and funding, but without losing the main equity benefits of the NHS (healthcare remained free at the point of service and financed through taxation). However, much of the gain from the Internal Market was countered by the increased cost of running the administration-intensive system, and the lack of competition between providers in many areas (due to the presence of only one general hospital) also reduced the scope for increased efficiency. On the whole though, the system was regarded as a success: the 1997 Labour
government did not abolish it on taking office, though it combined groups of GP fundholders to form larger Primary Care Trusts
as purchasers of healthcare.
Critics of quasi-markets argue that they can lead to problems of cream skimming
. For example, the introduction of open enrolment in UK secondary schools after 1988 (whereby parents could choose which secondary school to send their child to, rather than being limited to the nearest) led to popular schools being oversubscribed. This allowed these schools to select which pupils they would accept, leading some to discriminate against children from low-income backgrounds or non-traditional family structures (e.g. inviting "both" of a child's parents to an informal meeting with the headteacher so as to determine by stealth whether the child comes from an "appropriate" family). Open enrolment also led popular schools to expand their intake, leading to the growth of very large schools with resulting discipline problems, at the expense of smaller schools and rural schools.
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
institutional structure that is designed to reap the supposed efficiency
Efficiency (economics)
In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another if it can provide more goods and services for society without using more resources...
gains of free markets without losing the equity
Equity (economics)
Equity is the concept or idea of fairness in economics, particularly as to taxation or welfare economics. More specifically it may refer to equal life chances regardless of identity, to provide all citizens with a basic minimum of income/goods/services or to increase funds and commitment for...
benefits of traditional systems of public administration and financing.
A notable example would be the NHS
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...
Internal Market
Internal market
An internal market operates inside an organization or set of organizations which have decoupled internal components. Each component trades its services and interfaces with the others. Often a set of government or government-funded set of organizations will operate an internal market...
(introduced in 1990): under this system, the purchase and provision of healthcare in the UK was split up, with government-funded GP
General practitioner
A general practitioner is a medical practitioner who treats acute and chronic illnesses and provides preventive care and health education for all ages and both sexes. They have particular skills in treating people with multiple health issues and comorbidities...
fundholders "purchasing" healthcare from NHS Trust
NHS Trust
A National Health Service trust provides services on behalf of the National Health Service in England and NHS Wales.The trusts are not trusts in the legal sense but are in effect public sector corporations. Each trust is headed by a board consisting of executive and non-executive directors, and is...
s and District Health Authorities, who competed against one another for the GPs' custom. This led to increased efficiency, as hospitals now needed to offer procedures at lower costs in order to win patients and funding, but without losing the main equity benefits of the NHS (healthcare remained free at the point of service and financed through taxation). However, much of the gain from the Internal Market was countered by the increased cost of running the administration-intensive system, and the lack of competition between providers in many areas (due to the presence of only one general hospital) also reduced the scope for increased efficiency. On the whole though, the system was regarded as a success: the 1997 Labour
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
government did not abolish it on taking office, though it combined groups of GP fundholders to form larger Primary Care Trusts
NHS Primary Care Trust
An NHS primary care trust is a type of NHS trust, part of the National Health Service in England. PCTs commission primary, community and secondary care from providers. Until 31 may2011 they also provided community services directly. Collectively PCT are responsible for spending around 80% of the...
as purchasers of healthcare.
Critics of quasi-markets argue that they can lead to problems of cream skimming
Cream skimming
Cream skimming is a pejorative term used to refer to the perceived business practice of a company providing a product or a service to only the high-value or low-cost customers of that product or service....
. For example, the introduction of open enrolment in UK secondary schools after 1988 (whereby parents could choose which secondary school to send their child to, rather than being limited to the nearest) led to popular schools being oversubscribed. This allowed these schools to select which pupils they would accept, leading some to discriminate against children from low-income backgrounds or non-traditional family structures (e.g. inviting "both" of a child's parents to an informal meeting with the headteacher so as to determine by stealth whether the child comes from an "appropriate" family). Open enrolment also led popular schools to expand their intake, leading to the growth of very large schools with resulting discipline problems, at the expense of smaller schools and rural schools.