Managed Competition Theory as a Basis for Health Care Reform (original) (raw)

Managed competition in health care and the unfinished agenda

Health care financing review, 1986

A market made up of health care financing and delivery plans and individual consumers, without a carefully drawn set of rules to mitigate market failures, and without mediation by collective action on the demand side, cannot produce efficiency and equity. The concept of competition that can achieve these goals, at least to a satisfactory approximation, is managed competition, with intelligent active agents on the demand side, called sponsors, that contract with the competing health care plans and continuously structure and adjust the market to overcome its tendencies to failure. A great deal remains to be done to achieve the goals envisioned by the "procompetition reformers."

Economic Theory and Political Reality: Managed Competition and U.S. Health Policy

Politics <html_ent glyph="@amp;" ascii="&"/> Policy, 2006

During the 1992 campaign, candidate Bill Clinton made the strategic decision to embrace many aspects of an economic model called "managed competition" in his approach to health-care reform. Managed competition ideas did not die when Clinton's health plan expired. Instead, they informed the 1997 expansion of a demonstration project into the Medicare + Choice program. Today, the Medicare + Choice legacy lives on in the Medicare Advantage and prescription drug programs created by the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Shortcomings of the managed competition approach received little public attention during the debate over the Medicare Modernization Act, despite the fact that the record of Medicare + Choice is disappointing in a number of respects. There are serious questions about the ability of the managed competition approach to control costs and achieve equitable access to high-quality care. Nevertheless, the approach remains influential largely because of political considerations.

MANAGED COMPETITION IN FLORIDA HEALTH CARE: ITS STRENGTHS AND WEAKNESSES

Review of Policy Research, 2000

Managed competition in health care is a model for reform that has been adopted by several states and considered as a model for national health care reform. This article assesses the strengths and weaknesses of managed competition in Florida based on the responses of essential participants in the managed competition network and data from network documents. Results of the analysis reveal that the strength of the reform has been in offering small employers and their employees a wide choice of health care insurance and in providing them with information to make informed health insurance choices. In addition to increasing choice and information, the managed competition network has become the small group insurance industry watchdog, applying pressure to keep the market fair and functioning. However, cost control difficulties and a continued limited access to health insurance demonstrate the weaknesses of the Florida reform. The article concludes by discussing the politicization of health care reform in Florida and the future of this reform effort in a changing political climate.

The history and principles of managed competition

Health Affairs, 1993

Health policymakers listening to presidential candidate Bill Clinton's proposals for health system reform may have felt a sense of deja vu as he returned time and again to the theme of "managed competition" in his speeches. The term was familiar to many who had been following the speaking and writing of Alain Enthoven as he refined and articulated the concept. In Enthoven's construct, managed competition relies on a sponsor to structure and adjust the market for competing health plans, to establish equitable rules, create price-elastic demand, and avoid uncompensated risk selection. That sponsor could take the form of a health insurance purchasing cooperative, or HIPC, comprising members of the employer and consumer communities. Enthoven's definition of managed competition is a blending of the competitive and regulatory strategies that have coexisted uneasily for years in the U.S. health cure system. As happens with many concepts that become election-year rhetoric, managed competition has come to mean different things to different people. In this essay Enthoven retraces the development of his ideas and rearticulates the principles of managed competition-including what managed competition is not. It is not, he says, "the latest buzzword that anybody should feel free to uppropiate. .. [nor is it] just a grab bag of' ideas that sound good. It is an integrated framework that combines rational principles of microeconomics with careful observation and analysis of what works.

Reconsidering the Role of Competition in Health Care Markets: Introduction

Journal of Health Politics, Policy and Law, 2000

In recent years there has been a surge of interest in reforming the organization and delivery of health systems by relying more on market competition. Although much of the impetus has emanated from the United States, the phenomenon is worldwide (Brown 1998). Recognizing the significance of these trends, in May 1998 we organized an international conference in Berlin on "Reconsidering the Role of Competition in Health Care Markets." The two-day meeting was jointly sponsored by the UCLA Center for Health Policy Research, the Karolinska Institutet in Sweden, and the Wissenschaftszentrum Berlin für Sozialforschung (WZB; in English, the Berlin Science Center for Social Research). The conference, which was hosted by the WZB, included thirty-one individuals from ten countries. This special section presents a summary of the main issues on which the meeting focused, followed by ten brief reports on the interplay of markets and government in specific developed countries. It concludes with a short analysis of the implications of the forgoing material on health care policy internationally and two commentaries that bring additional perspective to these issues.

Competition policy in health care markets: navigating the enforcement and policy maze

Health affairs (Project Hope), 2014

US health care is in ferment. Private entities are merging, aligning, and coordinating in a wide array of configurations. At the same time, there is a great deal of policy change. This includes the federal government's Affordable Care Act, as well as actions by Medicare, state legislatures, and state agencies. The health system is built upon markets, which determine how (and how well) goods and services are delivered to consumers, so it is critical that these markets work as well as possible. As the primary federal antitrust enforcement agencies, the Federal Trade Commission and the Department of Justice are charged with ensuring that health care markets operate well, but they are not alone. The functioning of health care markets is also profoundly affected by other parts of the federal government (notably the Centers for Medicare and Medicaid Services) and by state legislation and regulation. In this current period of such dynamic change, it is particularly important for the an...

The Marketplace in Health Care Reform -- The Demographic Limitations of Managed Competition

New England Journal of Medicine, 1993

Background The theory of managed competition holds that the quality and economy of health care delivery will improve if independent provider groups compete for consumers. In sparsely populated areas where relatively few providers are required, however, it is not feasible to divide the provider community into competing groups. We examined the demographic features of health markets in the United States to see what proportion of the population lives in areas that might successfully support managed competition.

Competition and quality among managed care plans in the USA

International Journal for Quality in Health Care, 1998

This paper examines the popular idea that competition among managed care plans will lead not only to lower prices, but also to improved quality. We explore the likelihood that competition based on quality will occur and that better quality care will result. First, we discuss key elements of competitive theory and then we attempt to apply them to markets for health care coverage and care. We identify the conditions necessary for competition to have the desired effects and assess the extent to which those conditions do or can exist. We conclude that in the USA, many consumers have no choice among plans and, therefore, cannot select one based on quality. Moreover, the evidence suggests that as long as price varies among health plans, consumers who do have a choice will tend to emphasize price, not quality, in making their selections. We conclude with suggestions to increase the likelihood that quality can improve as a result of competition.