Tag Archives: managed competition

Health Care Costs

Hospital Ownership of Physicians Drives Up Costs

17 Comments

New research published in the JAMA Internal Medicine journal supports, with rigorous data analysis, that hospital ownership of medical practices drives up costs:

Among the 240 Metropolitan Statistical Areas, physician-hospital integration increased from 2008 to 2012 by a mean of 3.3 percentage points, with considerable variation in increases across MSAs. For our study sample of 7,391,335 nonelderly enrollees, an increase in physician-hospital integration equivalent to the 75th percentile of changes experienced by MSAs was associated with a mean increase of $75 per enrollee in annual outpatient spending from 2008 to 2012, a 3.1% increase relative to mean outpatient spending in 2012). This increase in outpatient spending was driven almost entirely by price increases because associated changes in utilization were minimal (corresponding change in price-standardized spending, $14). Changes in physician-hospital integration were not associated with significant changes in inpatient spending ($22 per enrollee) or utilization ($10 per enrollee).

(Note: I have edited out the measures of statistical significance from the abstract, for ease of reading.)

Continue reading Hospital Ownership of Physicians Drives Up Costs →

Health Alerts

Where are the Conservative Ideas on Health Reform? All Over the Map.

20 Comments

The liberals have it all wrong. Conservatives are not lacking health reform ideas. They’re drowning in them.

Following the publication of Mark Pauly and John Goodman’s “Tax Credits for Health Insurance and Medical Savings Accounts,” many right-of-center health policy analysts endorsed the principle of lump sum tax credits to subsidize private health insurance and most endorsed some version of Health Savings Accounts [here and here]. The patient-centered point of view in John Goodman and Gerald Musgrave’s Patient Power, and the focused-factory, supply-side competition envisioned in Regina Herzlinger’s Consumer Driven Health Care are also generally accepted.

These ideas are reflected in the Coburn/Burr/Ryan/Nunes bill as well as in the health plan John McCain adopted when running for president, although neither plan has been endorsed by most Republican Members of Congress.

Beyond that, where do conservatives stand on the critical problems of controlling costs, increasing quality, improving access to care and reforming insurance markets? Answer: they’re all over the place. In fact, there is probably no other public policy area on which there is so much diversity of right-of-center opinion than there is right now on health policy. This may explain why the current House Republican plan is so anemic.

A brief summary of conservative/libertarian proposals is below the fold.

httpv://www.youtube.com/watch?v=J4cuEAU9mXM

Arm chair warriors often fail, and we’ve been poisoned by these fairy tales…
Who knows how long this will last, now we’ve come so far, so fast.

 

Continue reading Where are the Conservative Ideas on Health Reform? All Over the Map. →

Health Care Costs

The Dutch Version of Managed Competition

7 Comments

This is Ab Klink, the Dutch health minister, interviewed by Gardiner Harris in The New York Times:

In the Netherlands, everyone chooses from a list of 10 or so insurers who offer a standardized health plan that can be enriched with other options. Those who cannot afford the premiums are given subsidies… The government once set prices for nearly all medical services, but to inject some competition into the system, the government last year allowed prices to vary for about one-third of medical services. Next year that share will increase to half. I cannot tell you that Dutch hospitals are better than the Mayo Clinic or Johns Hopkins. Probably it’s the other way around… We would love the Mayo to open a hospital in the Netherlands.

Health Care Costs

Surprise: Managed Competition Doesn’t Control Costs

5 Comments

At least Ezra Klein is surprised. And he surmises both conservative and liberal believers in health insurance exchanges will be baffled as well by a Kaiser graphic which shows that neither the Federal Employee Health Benefit Program nor the California public employees system (CalPERS) controls costs any better than other employers have.

But yours truly is not surprised. Nor will be loyal readers who have followed our thinking on this issue through the years.

Health Care Costs

The Parente/Feldman/Pauly Health Reform Plan

4 Comments

Beginning with BHO’s basic approach to health reform, Steve Parente, Roger Feldman and Mark Pauly propose a reform with much less regulation and less spending. The plan reduces the number of uninsured by one-third and does so at about half the cost of the plans on Capitol Hill:

  • There are no mandates on individuals or employers.
  • There is no net increase in taxes (subsidies for people in the Exchange are paid for by capping the current tax subsidies).

Although the authors call their proposal, “Meaningful Market-Based Health Reform,” competition in the Exchange is managed competition which we have previously analyzed and criticized.

Although details are missing, the dangers are (1) the subsidy system will become a new entitlement and (2) regulations pertaining to the Exchange will prevent entrepreneurs from developing innovative solutions to the problems of cost, quality and access.

Health Alerts

Managed Competition in Florida Medicaid

3 Comments

Managed competition doesn’t work the way its advocates think it works. Despite glowing descriptions of the Federal Employee Health Benefits Program (FEHBP) by Alain Enthoven and equally effusive praise from some of our friends on the right, the FEHBP is deeply flawed. The versions created for state employees and many college and university employees have these same flaws. Managed competition in Medicaid also shares those flaws – even though it may still be an improvement over traditional Medicaid.

A Kaiser study of the Florida Medicaid program found that:

  • About three in ten enrollees were not aware they needed to choose among competing private health plans.
  • Over half of those who were aware had difficulty making a choice.
  • Four in ten enrollees appear to have been assigned to a plan by the state rather than choosing one on their own.

Had Kaiser investigated the FEHBP or any of the various state and university health systems they would have discovered similar lack-of-information and lack-of-understanding problems. Kaiser researchers seem to think (1) they are studying a consumer choice model and (2) they have found flaws in that model. They are wrong on both accounts. Continue reading Managed Competition in Florida Medicaid →