Managed Competition in Health Care Reform: Just Another American Dream,or the Perfect Solution?

See Altman Stuart H. Rodwin Marc A. , “Halfway Competitive Markets and Ineffective Regulation: The American Health Care System,” Journal of Health Politics, Policy and Law, 13, no. 2 (1988): 323–40.

For a critical assessment of the American health system, see Reinhardt Uwe E. , “The United States: Breakthroughs and Waste,” Journal of Health Politics, Policy and Law, 7, no. 4 (1992): 637–66.

Altman Rodwin , op. cit., p. 333.

A useful compendium containing the proceedings of a conference on competition in health care, and reflecting thought at the time, can be found in Greenberg Warren , ed., Competition in Health Care (Germantown, Maryland: Aspen Systems Corporation, 1978). A decade later, that compendium was followed by a retrospective published in the form of a series of papers in the Journal of Health Politics, Policy and Law, 13, no. 2 (1988).

The bulk of American households receive their health insurance from their employers. Typically, such a policy might require the family to pay $300 or so per year out of pocket before any insurance coverage sets in at all, and then to pay 20 percent of all health care bills until a maximum out-of-pocket amount of, say, $3,000 per year is reached.

See, for example, Schieber George J. Pouillier Jean-Pierre Greenwald Leslie M. , “Health Spending, Delivery, and Outcomes in OECD Countries,” Health Affairs, Summer (1993): 120–29.

U.S. Congressional Budget Office, Trends in Health Spending: An Update (Washington, D.C.: Congressional Budget Office, June, 1993), p. 2.

See Enthoven Alain C. , “Why Managed Competition Has Failed to Contain Health Costs,” Health Affairs, Fall (1993): 27–43. See also Enthoven Alain C. , “Consumer-Choice Health Plan,” The New England Journal of Medicine, 298 (1978): 650–58 and 709–20; and the subsequent revision of the plan in Enthoven Alain C. Kronick Richard , “A Consumer-Choice Health Plan for the 1990s,” The New England Journal of Medicine, 320 (1989): 29–37; and 320 (1989): 94–101.

As the famous health insurance experiment conducted by the RAND Corporation during the 1970s had suggested, in a carefully controlled setting, coinsurance and deductibles do reduce the use of health care and total health spending substantially, other things being equal. See Manning Willard G. Newhouse Joseph P. Duan Naihua Keeler Emmett Leibowitz Arleen Susan Marquis M. , “Health Insurance and the Demand for Medicare Care: Results from a Randomized Experiment,” American Economic Review, 77, no. 3 (1987): 251–77.

Data furnished to the author by the Medstat Corporation of Ann Arbor, Michigan, a private firm which tracks the health care utilization and expenditures of several million American households on behalf of the business corporations who pay the health insurance premiums for these households.

See Berk Marc L. Monheit Alan C. , “The Concentration of Health Expenditures,” Health Affairs, Winter (1992): 145–49.

This section draws heavily on Uwe Reinhardt E. , “Reorganizing the Financial Flows in U.S. Health Care,” Health Affairs, Supplement (1993): 172–73.

For example, the Cooper-Breaux bill (H.R. 3222/S. 1579) introduced by Congressman Cooper (D.-Tenn.) and Senator Breaux (D.-Louisiana), and virtually all of the plans proposed by Republicans, such as the Thomas–Chafee bill (H.R. 3704/S. 1770) and the Stearns–Nickles bill (H.R. 3698/S. 1743). For a convenient summary of these plans, see U.S. Congress, The Library of Congress, Congressional Research Service, Summary Comparison of Selected Health Care Reform Bills, mimeograph, March 2, 1994.

Notably the McDermott-Wellstone bill (H.R. 1200/S. 491).

See Enthoven Kronick , op. cit.; and Enthoven Paul M. Etheridge Lynn , “The Jackson Hole Initiative for a Twenty First Century American Health System,” Health Economics, 1, no. 3 (1992): 149–68.

President Clinton's Health Security Act (H.R. 3600/S. 1757) or the chairman's remark from the Committee of Ways and Means, U.S. House of Representatives, passed by the Committee on June, 1994.

See Enthoven Kronick , op. cit.

Somers Herman M. Somers Anne R. , “Major Issues in National Health Insurance,” The Milbank Memorial Fund Quarterly, April (1972): 177–210.

See, in particular, Ellwood Enthoven Etheridge , op. cit.

California Department of Insurance, California Health Care in the 21st Century: A Vision for Reform, mimeograph, August, 1992.

To be included on the menu, a plan would have to conform to certain rules and regulations stipulated either in the federal or state statutes, or promulgated by the HIPC itself.

See Vladeck Bruce C. , “Old Snake Oil in New Bottles,” The President's Letter, United Hospital Fund, September (1992).

Aaron Henry J. Schwartz William B. , “Managed Competition: Little Cost Containment without Budget Limits,” Health Affairs, Supplement (1993): 204–15.

Fielding Jonathan E. Rice Thomas , “Can Managed Competition Solve Problems of Market Failure?,” Health Affairs, Supplement (1993): 216–28.

See Ellwood Enthoven Etheridge , op. cit., pp. 160, 156.

A question exists whether this “socialization” of costs should be confined to the sponsor itself or carried further to embrace all sponsors in a state, should more than one exist.

Newhouse Joseph P. , “Patients at Risk: Health Reform and Risk Adjustment,” Health Affairs, Spring (1994): 132–46.

Ellwood Enthoven Etheridge , op. cit., p. 159.

As Danzon has pointed out, however, these systems may engender hidden costs (for example, long wait times) not properly accounted for in such comparisons. See Danzon Patricia M. , “Hidden Overhead Costs: Is Canada's System Really Less Expensive?,” Health Affairs, Spring (1992): 21–43.

These medical loss ratios are regularly published in the investment analyses of the HMO industry produced by Wall Street firms, such as Salomon Brothers and Goldman Sachs.

Data furnished to the author in a private communication, dated June 21, 1993, with Conway William A. M.D., Vice President of Operations, Henry Ford Medical Group, Detroit, Michigan.

Kronick Richard Goodman David C. Wennberg John , “The Marketplace in Healthcare Reform: Demographic Limitations on Managed Competition,” The New England Journal of Medicine, 328 (1993): 148–52.

Reinhardt Uwe E. , “Reflections on the Meaning of Efficiency: Can Efficiency be Separated from Equity?,” Yale Law & Policy Review, 10, no. 2 (1992): At 311.

Lehrer Tom , “Wernher von Braun,” That Was The Year That Was (San Francisco: Reprise Records, 1965).

For example, the Boeing Corporation with its 747 series, the Lockheed Corporation with its L-1011 TriStar, the McDonnell-Douglas Corporation with its DC-10, and the European Airbus Industry with its A-300 airbus series.

See Enthoven Alain C. Singer Sara J. , “A Single Payer System in Jackson Hole Clothing,” Health Affairs, Spring (1994): 81–95.