The recent dispute between two associations,
the
Jordan Insurance Federation (JIF) and the
Jordan Medical Association (JMA),
has garnered substantial attention from the media and the public. Physicians
threatened to decline patient care until the matter is resolved in their favor.
Under mounting public pressure, the government, represented by the
Central Bank of Jordan (CBJ) as the regulator of the insurance sector, and the
Ministry of Industry, Trade and Supplies (MOITS), home to the Competition Directorate
responsible for safeguarding competition (not necessarily competitors) in the
Kingdom, has stepped in to mediate.
اضافة اعلان
Inflation and rising living costs
The Insurance Federation asserts that the
JMA is proposing a 400
percent increase in physicians' fees, whereas the JMA counters with a 30 to 40
percent increase, attributing the decision to inflation and rising living
costs. In response, the government has established a committee after engaging
with both parties, aiming to find a middle ground.
The Insurance Federation asserts that the JMA is proposing a 400 percent increase in physicians' fees, whereas the JMA counters with a 30 to 40 percent increase, attributing the decision to inflation and rising living costs. In response, the government has established a committee after engaging with both parties, aiming to find a middle ground.
The problem and its solution is unclear
However, the problem and its solution seem unequivocally clear. An
examination of the
Law Amending the Competition Law No. 12 for the Year 2023
highlights Article 6, which prohibits institutions with a dominant market
position or significant market influence from abusing this power to impede,
limit, or obstruct competition. The term "dominant organization" is
defined as one capable of controlling or affecting market activities. This
raises the possibility that fee setting could defy the law.
They risk becoming cartels
Another pertinent article is Article 20 (Paragraph 3-C), which
directly pertains to the case at hand. It prohibits any association or private
sector entity responsible for regulating or advocating for economic or
commercial establishments from making decisions that
breach competition regulations, restrict competition, or violate the provisions of this law and
other legislations. Such actions incur penalties. This makes it illegal for
associations, regardless of their nature, to
establish prices for their members' services or outputs. The same rule applies to all associations;
otherwise, they risk becoming cartels (effectively monopolies), as prohibited
by Article 5 of the Law. Additionally, Article 8 A, 1, prohibits entities like
producers, importers, wholesalers, or service providers from imposing a lower
limit on resale prices.
It can be argued that no association or society possesses the right to dictate prices for its members. From an economic perspective, uniform pricing across the board leads to inefficiency, making discriminatory pricing a better alternative. The market, guided by skills and reputation, should determine who earns more or less among physicians, rather than the decision of an association.
It can be argued that no association or society possesses the right
to dictate prices for its members. From an
economic perspective, uniform
pricing across the board leads to inefficiency, making discriminatory pricing a
better alternative. The market, guided by skills and reputation, should
determine who earns more or less among physicians, rather than the decision of
an association.
Out of touch
Regarding inflation, the
total price increase since 2008 stands at
6.67 percent, far from the claimed 30 to 40 percent, making significant fee
hikes unwarranted. Moreover, the growth rate, whether nominal (
Factoring in inflation) or real values, remains low, rendering any discussion of
substantially raising prices for essential services out of touch with current
circumstances.
Yusuf Mansur is CEO of the Envision Consulting
Group and former minister of state for economic affairs.
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