Abstract
The first year of the internal market in the NHS has been claimed to have resulted in increased efficiency. These claims, however, are hard to substantiate because the systems for operating the market are not fully in place. Examination of data on tax relief for private health insurance premiums for over 60s, general practice fundholding, and implementation and transaction costs suggest that much of the increased efficiency is not due to the reforms but to increased funding. Furthermore, some of the changes seem to be decreasing market forces and reducing efficiency.
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