REGULATING MARKETS - THE REAL COSTS OF POLY-CENTRIC ADMINISTRATION UNDER THE NATIONAL-HEALTH INSURANCE SCHEME (1912-46)

Using a transaction cost perspective, this article explores the admini strative costs involved in quasi-market systems of public service deli very. Employing the historical example of the interwar National Health Insurance scheme, it revives Beveridge's early criticisms of the dupl ication and expense incurred by the utilization of approved societies for benefit administration purposes. To this we should add the costs i ncurred by central audit and actuarial evaluation, the main mechanisms through which the societies were centrally regulated. The article con cludes that, thanks to regulatory requirements, this poly-centric syst em of public administration was more expensive than a state-run equiva lent - and that this message has significance for recent reforms. In t he course of the analysis, the narrowness of a 'pure' transaction cost perspective is demonstrated and common assumptions concerning distinc tions between 'the state and the market' in administrative structures are drawn into question. The division of public administration into th ese two typologies is arguably based on a false dichotomy.