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Public governance of healthcare in the United States: a transaction costs economics (TCE) analysis of the 2010 reform

Published online by Cambridge University Press:  07 June 2012

ANTOON SPITHOVEN
ANTOON SPITHOVEN*
Affiliation:
Utrecht University School of Economics (USE), P.O. Box 80125, 3508 TC Utrecht, the Netherlands
*
*Email: [email protected]
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Abstract:

This article aims to address the lack of transaction costs economics (TCE) studies in health economics. It provides a content analysis of ObamaCare and 25 lawsuits that challenge the 2010 reform. It shows that the cultural environment determines the strength of features of governance structures and in line with this the strength of their instruments. Following Williamson's TCE model of governance structures, the zero transaction costs criterion is supplanted by the remediableness criterion. Assuming that ObamaCare might be ruled to be constitutional, the regulation of healthcare is found to be a comparative efficient governance structure in addressing adverse selection. However, the TCE analysis also reveals that ObamaCare itself is subject to some flaws in efficiency and effectiveness, namely: unbalanced adaptation mechanisms, unbalanced incentives and weak enforcement devices.

Type
Research Article
Information
Journal of Institutional Economics , Volume 8 , Issue 4 , December 2012 , pp. 429 - 457
Copyright
Copyright © Millennium Economics Ltd 2012

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