Abstract
Many studies arguing for or against markets to finance medical care investigate "market-oriented" measures such as cost sharing. This article looks at the experience in the American medical marketplace over more than a decade, showing how markets function as institutions in which participants who are self-seeking, but not perfectly rational, exercise power over other participants in the market. Cost experience here was driven more by market power over prices than by management of utilization. Instead of following any logic of efficiency or equity, system transformations were driven by beliefs about investment strategies. At least in the United States' labor and capital markets, competition has shown little ability to rationalize health care systems because its goals do not resemble those of the health care system most people want.