Are market forces strong enough to deliver efficient health care systems? Confidence is waning

Health Affairs

Volumn 23, Issue 2, 2004, Pages 8-21

  Nichols, Len M ^a   Ginsburg, Paul B ^a   Berenson, Robert A ^a   Christianson, Jon ^a   Hurley, Robert E ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

GOVERNMENT; HEALTH CARE DELIVERY; HEALTH CARE POLICY; HEALTH CARE SYSTEM; HUMAN; MARKET; POLITICS; REVIEW;

EID: 1842729582     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.23.2.8     Document Type: Review

References (26)

1. World Health Organization, World Health Report, 2002, www.who.int/whr/2002/en (20 November 2003).
2. L.T. Kohn, J.M. Corrigan, and M.S. Donaldson, eds., To Err Is Human: Building a Safer Health System (Washington: National Academies Press, 1999); Institute of Medicine, Crossing the Quality Chasm: A New Health System for the Twenty-first Century (Washington: National Academies Press, 2001); E.A. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 348, no. 26 (2003): 2635-2645; and S.F. Jencks, E.D. Huff, and T. Cuerdon, "Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001," Journal of the American Medical Association 289, no. 3 (2003): 305-312.
3. L.T. Kohn, J.M. Corrigan, and M.S. Donaldson, eds., To Err Is Human: Building a Safer Health System (Washington: National Academies Press, 1999); Institute of Medicine, Crossing the Quality Chasm: A New Health System for the Twenty-first Century (Washington: National Academies Press, 2001); E.A. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 348, no. 26 (2003): 2635-2645; and S.F. Jencks, E.D. Huff, and T. Cuerdon, "Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001," Journal of the American Medical Association 289, no. 3 (2003): 305-312.
4. L.T. Kohn, J.M. Corrigan, and M.S. Donaldson, eds., To Err Is Human: Building a Safer Health System (Washington: National Academies Press, 1999); Institute of Medicine, Crossing the Quality Chasm: A New Health System for the Twenty-first Century (Washington: National Academies Press, 2001); E.A. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 348, no. 26 (2003): 2635-2645; and S.F. Jencks, E.D. Huff, and T. Cuerdon, "Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001," Journal of the American Medical Association 289, no. 3 (2003): 305-312.
5. L.T. Kohn, J.M. Corrigan, and M.S. Donaldson, eds., To Err Is Human: Building a Safer Health System (Washington: National Academies Press, 1999); Institute of Medicine, Crossing the Quality Chasm: A New Health System for the Twenty-first Century (Washington: National Academies Press, 2001); E.A. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States," New England Journal of Medicine 348, no. 26 (2003): 2635-2645; and S.F. Jencks, E.D. Huff, and T. Cuerdon, "Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001," Journal of the American Medical Association 289, no. 3 (2003): 305-312.
6. In a "technically efficient" health care system, unnecessary care could be defined by neutral health professionals on the basis of expected clinical value added. This might preclude some services that some consumers might value and thus is not the same concept as an economically efficient system. Economic efficiency elevates consumers' sovereignty above the judgment of "experts" and might entail more or less total resource use than minimizing the cost of delivering objective clinical value. We adopt the technical definition of efficiency in this paper, for we think that it is closest to what most commentators mean when they discuss an efficient health care system.
7. A.C. Enthoven, "The History and Principles of Managed Competition," Health Affairs (Supplement 1993): 24-48.
8. P. Starr and W.A. Zelman, "A Bridge to Compromise: Competition under a Budget," Health Affairs (Supplement 1993): 7-23.
9. See the Center for Studying Health System Change (HSC) Community Reports for documentation, www.hschange.org.
10. Efficiency here is not to be confused with cost minimization. All providers have incentives to minimize their own costs of production for the quantity of services they provide, but those with market power over local consumers within our third-party payment system also have powerful incentives to charge noncompetitive prices and to expand the quantity and intensity of services beyond what evidence-based practice would define as clinically valuable enough to merit the extra social cost of production.
11. M.S. Marquis and S.H. Long, "Trends in Managed Care and Managed Competition, 1993-1997," Health Affairs (Nov/Dec 1999): 75-88.
12. R.E. Hurley, B.C. Strunk, and J.S. White, "The Puzzling Popularity of the PPO," Health Affairs (Mar/Apr 2004): 56-68.
13. D.A. Draper et al., "The Changing Face of Managed Care," Health Affairs (Jan/Feb 2002): 11-23; and B. Strunk, P. Ginsburg, and J. Gabel, "Tracking Health Care Costs," Health Affairs, 26 September 2001, content.healthaffairs.org/cgi/content/abstract/hlthaff.wl.39 (8 December 2003).
14. D.A. Draper et al., "The Changing Face of Managed Care," Health Affairs (Jan/Feb 2002): 11-23; and B. Strunk, P. Ginsburg, and J. Gabel, "Tracking Health Care Costs," Health Affairs, 26 September 2001, content.healthaffairs.org/cgi/content/abstract/hlthaff.wl.39 (8 December 2003).
15. R. Berenson, "Beyond Competition," Health Affairs (Mar/Apr 1997): 171-180; J. Christianson and S. Trude, "Managing Costs, Managing Benefits: Employer Decisions in Local Health Care Markets," Health Services Research 38, no. 1, Part 2 (2003): 357-373; S. Trude et al., "Employer-Sponsored Health Insurance: Pressing Problems, Incremental Changes," Health Affairs (Jan/Feb 2002): 66-75; and A.C. Enthoven, "Employment-Based Health Insurance Is Failing: Now What?" Health Affairs, 28 May 2003, content.healthaffairs .org/cgi/content/abstract/hlthaff. w3.237 (8 December 2003).
16. R. Berenson, "Beyond Competition," Health Affairs (Mar/Apr 1997): 171-180; J. Christianson and S. Trude, "Managing Costs, Managing Benefits: Employer Decisions in Local Health Care Markets," Health Services Research 38, no. 1, Part 2 (2003): 357-373; S. Trude et al., "Employer-Sponsored Health Insurance: Pressing Problems, Incremental Changes," Health Affairs (Jan/Feb 2002): 66-75; and A.C. Enthoven, "Employment-Based Health Insurance Is Failing: Now What?" Health Affairs, 28 May 2003, content.healthaffairs .org/cgi/content/abstract/hlthaff. w3.237 (8 December 2003).
17. R. Berenson, "Beyond Competition," Health Affairs (Mar/Apr 1997): 171-180; J. Christianson and S. Trude, "Managing Costs, Managing Benefits: Employer Decisions in Local Health Care Markets," Health Services Research 38, no. 1, Part 2 (2003): 357-373; S. Trude et al., "Employer-Sponsored Health Insurance: Pressing Problems, Incremental Changes," Health Affairs (Jan/Feb 2002): 66-75; and A.C. Enthoven, "Employment-Based Health Insurance Is Failing: Now What?" Health Affairs, 28 May 2003, content.healthaffairs .org/cgi/content/abstract/hlthaff. w3.237 (8 December 2003).
18. R. Berenson, "Beyond Competition," Health Affairs (Mar/Apr 1997): 171-180; J. Christianson and S. Trude, "Managing Costs, Managing Benefits: Employer Decisions in Local Health Care Markets," Health Services Research 38, no. 1, Part 2 (2003): 357-373; S. Trude et al., "Employer-Sponsored Health Insurance: Pressing Problems, Incremental Changes," Health Affairs (Jan/Feb 2002): 66-75; and A.C. Enthoven, "Employment-Based Health Insurance Is Failing: Now What?" Health Affairs, 28 May 2003, content.healthaffairs .org/cgi/content/abstract/hlthaff. w3.237 (8 December 2003).
19. G. Mays et al., "Tiered Networks," Issue Brief no. 71 (Washington: HSC, November 2003).
20. P. Fronstin, "Defined Contribution Health Benefits," Issue Brief no. 231 (Washington: Employee Benefit Research Institute, 2001).
21. J. Gabel, A. Lo Sasso, and T. Rice, "Consumer-Driven Health Plans: Are They More than Talk Now?" Health Affairs, 20 November 2002, content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.395 (8 December 2003).
22. See the case summaries listed in Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products, April 2003, www.ftc.gov/bc/ hcupdate030401.pdf (20 November 2003).
23. P.J. Hammer and W.M. Sage, "Critical Issues in Hospital Antitrust Law," Health Affairs (Nov/Dec 2003): 88-100.
24. IOM, "Fostering Rapid Advances in Healthcare: Learning from System Demonstrations" (Washington: National Academies Press, 2002); and Agency for Healthcare Research and Quality, "The National Healthcare Quality Report," 2003, www.qualitytools.ahrq.gov/qualityreport/download_report.aspx (28 January 2004).
25. IOM, "Fostering Rapid Advances in Healthcare: Learning from System Demonstrations" (Washington: National Academies Press, 2002); and Agency for Healthcare Research and Quality, "The National Healthcare Quality Report," 2003, www.qualitytools.ahrq.gov/qualityreport/download_report.aspx (28 January 2004).
26. P.B. Ginsburg and L.M. Nichols, "The Health Care Cost-Coverage Conundrum: The Care We Want versus the Care We Can Afford," HSC Annual Essay, Fall 2003, www.hschange.org/CONTENT/616/616.pdf (28 January 2004).