Policies designed to influence the actions, behaviors, and decisions of others by directive are regulatory policies. In a variety of ways, all levels of government establish regulatory policies. As with allocative policies, government establishes such policies to ensure that public objectives are met. The five basic categories of regulatory health policies are
1. market-entry restrictions;
2. rate- or price-setting controls on health services providers;
3. quality controls on the provision of health services;
4. market-preserving controls; and
The first four categories are variations ofeconomic regulation; the fifth seeks to achieve such socially desired ends as safe workplaces, nondiscrimina-tory provision of health services, and reduction in the negative externalities (side effects) that can be associated with the production or consumption of products and services.
Market-entry-restricting regulations include those through which health-related practitioners and organizations are licensed. Planning programs, through which approval for new capital projects by health services providers must be obtained from the state before the projects can proceed, are also market-entry-restricting regulations.
Although price-setting regulation is generally out of favor, some aspects of the pursuit of health are subject to price regulations. The federal government's control of the rates at which it reimburses hospitals for care provided to Medicare patients and its establishment of a fee schedule for reimbursing physicians who care for Medicare patients are examples ofprice regulation that carries enormous impact.
A third class of regulations are those intended to ensure that health services providers adhere to acceptable levels of quality in the services they provide and that producers of health-related products such as imaging equipment and pharmaceuticals meet safety and efficacy standards. For example, FDA is charged to ensure that new pharmaceuticals meet these standards. In addition, the Medical Devices Amendments (P.L. 94-295) to the Food, Drug and Cosmetic Act (P.L. 75-717) placed all medical devices under a comprehensive regulatory framework administered by FDA.
Because the markets for health services do not behave in truly competitive ways, government intervenes in these markets by establishing and enforcing rules of conduct for market participants. These rules of conduct form a fourth class of regulation, market-preserving controls. Antitrust laws, such as the Sherman Antitrust Act, the Clayton Act, and the Robinson-Patman Act, which are intended to maintain conditions that permit markets to work well and fairly, are good examples of this type of regulation.
The four classes of regulations outlined above are all variations of economic regulation. The primary purpose of social regulation, the fifth class, is to achieve such socially desirable outcomes as workplace safety and fair employment practices and to reduce such socially undesirable outcomes as environmental pollution and the spread of sexually transmitted diseases. Social regulation usually has economic impact, but the impact is secondary to the primary purposes of the regulations. Federal and state laws pertaining to environmental protection, disposal of medical wastes, childhood immunization requirements, and the mandatory reporting of communicable diseases are but a few obvious examples of social regulations at work in the pursuit of health.
Whether public policies take the form of laws, rules and regulations, operational decisions, or judicial decisions, they are always established within the context of a complex public policymaking process. Both allocative and regulatory policies are made within the process, and the activities and mechanisms used to create both categories of policies are essentially identical. A comprehensive model of this process, which applies to any level of government, is presented in Chapter 3. Before examining the model, however, it will be useful to consider the ways that health policies affect health and its pursuit. A direct and crucially important connection between health policies and health, which makes an understanding of the health policymaking process all the more important to everyone involved in the pursuit ofhealth, is described briefly in the next section and more extensively in Chapter 2.
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