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An interest group is a company of people who have some common concerns regarding a specific topic they try to address through public policy, thus joining their forces. These groups are important demand-side actors who try to guide politicians according to their interests (Costa-Font et al., 2020). In every community, group, or state, on every level of decision-making, there are numerous actors interested in influencing the policy-making process and shaping the policies according to their vision.
Healthcare is no exception from that rule; on the contrary, due to its general importance and subsequent funding, this is one of the spheres where many policy interests constantly meet and clash with each other. This happens in many countries, but the US is one of the primary examples of such a political battlefield. According to Giaimo (2014, p. 375), “the nation’s porous political system’s institutional fragmentation contains numerous “veto points” at which organized interests can modify and even block legislation they dislike.” These include the possibility to lobby interests at the federal and state levels through the executive branch, closely interact and cooperate with congress members, challenge laws in courts, and others.
Interest groups and their role in healthcare regulation can be perceived differently. In some cases, their influence is nothing but a prominent example of government failure; in other cases, these groups’ actions might not decrease the efficiency of the healthcare system (Costa-Font et al., 2020). The problem with efficiency results from the lobbying activities of interest groups that spend resources competing with each other in their attempts to influence the policy-making and budget allocation processes. These resources are perceived as waste because in most cases, only one group achieves its goal, and the resources that others spend do not bring much positive change for them. Otherwise, these resources could have been spent more productively within the economy. This competition between groups can produce different results for the system. According to Becker, fierce competition between a substantial number of groups can deliver results “not too far from efficiency” (as cited in Costa-Font et al., 2020, p. 162). This happens because the groups create opposing dynamics that result in policies and regulations, which to some extent, balance each other out.
On the other hand, when there are only several highly organized and influential interest groups, they can cause a substantial deviation from the most effective course of action in the industry. This can be observed in numerous industries where only a few major lobbying organizations can coordinate their efforts with each other easier, thus, creating more significant joint pressure. This scenario is the most problematic and leads to the most waste creation on average (Costa-Font et al., 2020). At the same time, it is incorrect to portray lobbying as something inherently damaging, as in the US it is just a legal tool that can be used in many ways.
However, one of the possible results of lobbying can be perceived as an ultimately negative outcome – extraction of rent by the lobbyist company. The interest group that won in the lobbying race can sometimes reshape the system’s policies or budget allocation procedures to create a permanent advantage over competitors. For instance, such a group can become the only legal supplier of some goods or services for the government or receive subsidies. In any case, rent-extraction implies the existence of some non-market advantage that can result from lobbying and used by the company to extract additional profits without creating adequate value.
References
Costa-Font, J., Turati, G., & Batini, A. (2020). The political economy of health and health care: The rise of the patient citizen. Cambridge University Press.
Giaimo, S. (2014). Interest groups, think tanks, and health care policy (1960s-present). In T.R. Oliver (Ed.), Guide to U.S. Health and Health Care Policy. Sage Publications, 375-392.
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