Competitive Bidding

Published: 2021-06-27 17:05:04
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Category: Economic development

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1) Competitive bidding does provide significant long-term cost savings when compared to other approaches that might be utilized by the government. One of the upsides of competitive bidding is that it brings into play a wide range of different companies, bringing about the newest and best ideas in medical equipment. Likewise, it does away with some of the cronyism that might have otherwise infected the system. When one analyzes this particular system, one has to take into account the realities of what the country is dealing with. It could be possible for people to be rewarded based upon their previous, existing relationships with government figures. This is something that can cause costs to run higher, as big waste may pile up and contractors may be able to reap the rewards of their relationships. Competitive bidding is a good idea because it makes everything more merit based. Even if people are being required to use the lowest bid medical products, they are still getting significant costs savings, which is something that can only be beneficial. Over the long run, as more and more contractors rely on the government to help keep their businesses afloat, they will have to alter their processes to ensure that they are doing things as cheaply as possible. The government is a big vendor. Medicare has the ability to pay out big money and provide contractors with enough business to help them over the long run. By having a competitive bidding system in place, there will be long-term incentives for companies to come in cheaper and cheaper, cutting their own costs and avoiding wasteful practices if they want to take advantage of the big contracts the government is offering. This downward pressure on costs can only be good for consumers, who will eventually reap the benefits of a market that is looking to get cheaper rather than one that does not have any qualms about rising costs.
2) If universal healthcare is implemented, then it is still possible to utilize competitive bidding to help with the process. It would actually become much more important and possible the more the government is actually involved in the provision of healthcare. To the extent the government is responsible for providing healthcare in a direct way, the government would then be a massive consumer of medically related goods. This would give the government a huge amount of leverage when it came to negotiations with various vendors. This means that vendors would need the government more than the government would need any individual vendor. By going with competitive bidding in the same way, a universal healthcare regime would be able to keep the costs of providing healthcare down. This is a good thing, especially because the government would be on the hook for providing healthcare even if the tax receipts happened to go down in a given year. Likewise, because vendors know that the government has to provide healthcare regardless of what happens, they could take advantage of the government on pricing. Competitive bidding would help to ensure that these prices stay low despite the fact that the US government has to provide healthcare. It is a means of shifting the burden from one side to the other.
Under the Affordable Care Act, there are still going to be Medicare and Medicaid payments made by the government. These things still exist in large form and still constitute a major player in the health provision market. Because these forces still exist, it is still critical to find ways to keep the costs of doing business low. Competitive bidding still provides an excellent way to keep down the costs, even after the passage of this law which also provides other ways to keep costs down.

Schatz, D., & Cefalu, W. T. (2016). Reevaluation of CMS’Competitive Bidding Program. Diabetes Care, 39(7), 1078-1079.
Song, Z., Landrum, M. B., & Chernew, M. E. (2013). Competitive bidding in Medicare Advantage: Effect of benchmark changes on plan bids. Journal of health economics, 32(6), 1301-1312.

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