Federal Reserve Bank of San Francisco

Community Development

The Cash Market in Health Care: A Community-Based Approach

Author(s):

December 2009

Community Development Investment Review

This article describes a new discovery in the health-care reform debate in America: the health-care market is not a single market. Rather, it is two markets, a dominant insurance market and a stunted, irrational cash market. The dysfunction of the cash market is an issue that affects all consumers in the health-care market but has a disproportionate impact on those in our society who are the most economically vulnerable. We also suggest a community-based approach to rationalizing the cash market intended to increase the value of the cash dollar in health care and thereby ensure access to services at appropriate prices and create the financial services that have an impact on the financial health of individuals and families.

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