A consumer-choice health plan for the 1990s. Universal health insurance in a system designed to promote quality and economy (1)

Regression Trees Identify Relevant Interactions: Can This Improve the Predictive Performance of Risk Adjustment?

Risk equalization formulas have been refined since their introduction about two decades ago. Because of the complexity and the abundance of possible interactions between the variables used, hardly any interactions are considered. A regression tree is used to systematically search for interactions, a methodologically new approach in risk equalization. Analyses are based on a data set of nearly 2.9 million individuals from a major German social health insurer. A two-step approach is applied: In the first step a regression tree is built on the basis of the learning data set. Terminal nodes characterized by more than one morbidity-group-split represent interaction effects of different morbidity groups. In the second step the 'traditional' weighted least squares regression equation is expanded by adding interaction terms for all interactions detected by the tree, and regression coefficients are recalculated. The resulting risk adjustment formula shows an improvement in the adjusted R² from 25.43% to 25.81% on the evaluation data set. Predictive ratios are calculated for subgroups affected by the interactions. The R² improvement detected is only marginal. According to the sample level performance measures used, not involving a considerable number of morbidity interactions forms no relevant loss in accuracy. Copyright © 2015 John Wiley & Sons, Ltd.

Health service system in transition

Purpose

The purpose of this paper is to present a historical overview of the health service sector in India. The development in the healthcare sector from the late eighteenth century into current times is examined from the prism of the role played by British and US healthcare systems in influencing change in the Indian setup.

Design/methodology/approach

Online databases searched were PubMed and JSTOR, using the search terms, “Indian health service system in transition”, “British influence on the Indian healthcare setup” and “American neo-liberal influence on Indian healthcare sector”. The authors then examined titles and abstracts of selected articles for short-listing relevant articles. Reference lists of selected articles were examined for further locating related studies. While this constituted the secondary literature for the current paper, reports by governmental and non-governmental organisation reports on the Indian health service system too were utilised as primary data sources.

Findings

Influenced by the British and later by the American healthcare system, the Indian healthcare network has undergone numerous changes. In the present era, the Indian healthcare system is increasingly veering towards the American model of healthcare delivery. Health is increasingly being conceived of as a commodity to be traded in the market, with the state’s role curtailed towards provisioning for and facilitating access of the weakest sections of the society through a means-tested insurance system. This has happened without adequate checks and balances on the private sector to ensure that the needs of the people accessing the system are adequately met.

Social implications

By tracing the development of the health service sector in India and the motives that guide such change, the paper depicts how the thrust of the system has altered from one providing universal healthcare services to the people, irrespective of their ability to pay, at the time of independence to commercialisation in present times. With the marketisation of healthcare, the focus has shifted from serving people to profiting from the provisioning of healthcare.

Originality/value

The paper throws light on the underlying inadequacies of the Indian healthcare setup and the need for more active participation by the government in this sector in the future if it aims to make healthcare more equitably accessible to its vast population.

Minding Ps and Qs: The Political and Policy Questions Framing Health Care Spending

Tracing the evolution of political conversations about health care spending and their relationship to the formation of policy is a valuable exercise. Health care spending is about science and ethics, markets and government, freedom and community. By the late 1980s the unique upward trajectory of post-Medicare U.S. health care spending had been established, recessions and tax cuts were eroding federal and state budgets, and efforts to harness market forces to serve policy goals were accelerating. From the initial writings on "managed competition," through the failed Clinton health reform effort in the early 1990s, to the passage of the Affordable Care Act in 2010, the policy narrative of health spending acquired a superficial consistency. On closer examination, however, it becomes apparent that the cost problem has been repeatedly reframed in political discourse even during this relatively brief period. The clearest transition has been from a narrative centered on rationing necessary care to one committed to reducing wasteful care - although the role of accumulated law and regulation in perpetuating waste remains largely unrecognized and the recently articulated commitment to population health seems an imperfect proxy for explicitly developing social solidarity with respect to health and health care in the United States.

Paying on the margin for medical care: Evidence from breast cancer treatments

We present a simple graphical framework to illustrate the potential welfare gains from a "top-up" health insurance policy requiring patients to pay the incremental price for more expensive treatment options. We apply this framework to breast cancer treatments, where lumpectomy with radiation therapy is more expensive than mastectomy but generates similar average health benefits. We estimate the relative demand for lumpectomy using variation in distance to the nearest radiation facility, and estimate that the "top-up" policy increases social welfare by $700-2,500 per patient relative to two common alternatives. We briefly discuss additional tradeoffs that arise from an ex-ante perspective.

Core attributes of stewardship; foundation of sound health system

Stewardship is not a new concept for public policy, but has not been used to its optimum by the health policy-makers. Although it is being practiced in most successful models of health system, but the onus to this function is still due till date. Lately, few experts in World Health Organization (WHO) have realized its importance and have been raising the issue at different platforms to pursue the most important function of the health system i.e. stewardship. The core attributes of stewardship need to be understood in totality for better understanding of the concept. These core attributes, required for hassle free functioning of a health system, include responsible manager, political will, normative dimension, balanced interventionist and proponents of good governance.

Integrating risk adjustment and enrollee premiums in health plan payment

In two important health policy contexts - private plans in Medicare and the new state-run "Exchanges" created as part of the Affordable Care Act (ACA) - plan payments come from two sources: risk-adjusted payments from a Regulator and premiums charged to individual enrollees. This paper derives principles for integrating risk-adjusted payments and premium policy in individual health insurance markets based on fitting total plan payments to health plan costs per person as closely as possible. A least squares regression including both health status and variables used in premiums reveals the weights a Regulator should put on risk adjusters when markets determine premiums. We apply the methods to an Exchange-eligible population drawn from the Medical Expenditure Panel Survey (MEPS).

Voice and choice by delegation

In many Western countries, options for citizens to influence public services are increased to improve the quality of services and democratize decision making. Possibilities to influence are often cast into Albert Hirschman's taxonomy of exit (choice), voice, and loyalty. In this article we identify delegation as an important addition to this framework. Delegation gives individuals the chance to practice exit/choice or voice without all the hard work that is usually involved in these options. Empirical research shows that not many people use their individual options of exit and voice, which could lead to inequality between users and nonusers. We identify delegation as a possible solution to this problem, using Dutch health care as a case study to explore this option. Notwithstanding various advantages, we show that voice and choice by delegation also entail problems of inequality and representativeness.

Swiss and Dutch "consumer-driven health care": ideal model or reality?

This article addresses three topics. First, it reports on the international interest in the health care reforms of Switzerland and The Netherlands in the 1990s and early 2000s that operate under the label "managed competition" or "consumer-driven health care." Second, the article reviews the behavior assumptions that make plausible the case for the model of "managed competition." Third, it analyze the actual reform experience of Switzerland and Holland to assess to what extent they confirm the validity of those assumptions. The article concludes that there is a triple gap in understanding of those topics: a gap between the theoretical model of managed competition and the reforms as implemented in both Switzerland and The Netherlands; second, a gap between the expectations of policy-makers and the results of the reforms, and third, a gap between reform outcomes and the observations of external commentators that have embraced the reforms as the ultimate success of "consumer-driven health care." The article concludes with a discussion of the implications of this "triple gap".

Choice policies in Northern European health systems

This paper compares the introduction of policies to promote or strengthen patient choice in four Northern European countries - Denmark, England, the Netherlands and Sweden. The paper examines whether there has been convergence in choice policies across Northern Europe. Following Christopher Pollitt's suggestion, the paper distinguishes between rhetorical (discursive) convergence, decision (design) convergence and implementation (operational) convergence (Pollitt, 2002). This leads to the following research question for the article: Is the introduction of policies to strengthen choice in the four countries characterised by discursive, decision and operational convergence? The paper concludes that there seems to be convergence among these four countries in the overall policy rhetoric about the objectives associated with patient choice, embracing both concepts of empowerment (the intrinsic value) and market competition (the instrumental value). It appears that the institutional context and policy concerns such as waiting times have been important in affecting the timing of the introduction of choice policies and implementation, but less so in the design of choice policies. An analysis of the impact of choice policies is beyond the scope of this paper, but it is concluded that further research should investigate how the institutional context and timing of implementation affect differences in how the choice policy works out in practice.

State-run insurance exchanges in federal healthcare reform: a case study in dysfunctional federalism

On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (ACA) into law, resulting in the most sweeping reform of the healthcare marketplace and one of the largest expansions in access to healthcare in American history. A key component to both restructuring the healthcare marketplace and improving access are the health insurance exchanges contained in the ACA. Today, individual and small group purchasers have difficulty finding affordable health insurance in the marketplace because they lack the tools to gather information about plans and because they lack the bargaining power to negotiate for affordable rates the way large purchasers can. In conjunction with the individual mandate, the health insurance exchanges aim to solve inefficiencies in the current marketplace by creating a centralized venue to connect insurers with individual and small business purchasers. Thus it both creates a place for insurers to readily find customers, who are now guaranteed to be there because of the individual mandate, and provides a place for customers to shop for insurance.

Gold and silver health plans: accommodating demand heterogeneity in managed competition

New regulation of health insurance markets creates multiple levels of health plans, with designations like "Gold" and "Silver." The underlying rationale for the heavy-metal approach to insurance regulation is that heterogeneity in demand for health care is not only due to health status (sick demand more than the healthy) but also to other, "taste" related factors (rich demand more than the poor). This paper models managed competition with demand heterogeneity to consider plan payment and enrollee premium policies in relation to efficiency (net consumer benefit) and fairness (the European concept of "solidarity"). Specifically, this paper studies how to implement a "Silver" and "Gold" health plan efficiently and fairly in a managed competition context. We show that there are sharp tradeoffs between efficiency and fairness. When health plans cannot or may not (because of regulation) base premiums on any factors affecting demand, enrollees do not choose the efficient plan. When taste (e.g., income) can be used as a basis of payment, a simple tax can achieve both efficiency and fairness. When only health status (and not taste) can be used as a basis of payment, health status-based taxes and subsidies are required and efficiency can only be achieved with a modified version of fairness we refer to as "weak solidarity." An overriding conclusion is that the regulation of premiums for both the basic and the higher level plans is necessary for efficiency.

Efficiency of Thai provincial public hospitals during the introduction of universal health coverage using capitation

We investigate the impact of implementing capitated-based Universal Health Coverage (UC) in Thailand on technical efficiency in larger public hospitals during the policy transition period. We measure efficiency before and during the transition period of UC using a two-stage analysis with Data Envelopment Analysis, bootstrap DEA, and truncated regressions. Our analysis indicates that during the transition period efficiency in larger public hospitals across the country increased. The findings differed by region, and hospitals in provinces with more wealth not only started with greater efficiency, but improved their relative position during the transitional phases of the UC system.

Ethics in American health 2: an ethical framework for health system reform

I argue that an ethical vision resting on explicitly articulated values and norms is critical to ensuring comprehensive health reform. Reform requires a consensus on the public good transcending self-interest and narrow agendas and underpinning collective action for universal coverage. In what I call shared health governance, individuals, providers, and institutions all have essential roles in achieving health goals and work together to create a positive environment for health. This ethical paradigm provides (1) reasoned consensus through a joint scientific and deliberative approach to judge the value of a health care intervention; (2) a method for achieving consensus that differs from aggregate tools such as a strict majority vote; (3) combined technical and ethical rationality for collective choice; (4) a joint clinical and economic approach combining efficiency with equity, but with economic solutions following and complementing clinical progress; and (5) protection for disabled individuals from discrimination.

Quality of care in for-profit and not-for-profit health plans enrolling Medicare beneficiaries

BACKGROUND

For-profit health plans now enroll the majority of Medicare beneficiaries who select managed care. Prior research has produced conflicting results about whether for-profit health plans provide lower quality of care.

OBJECTIVE

The objective was to compare the quality of care delivered by for-profit and not-for-profit health plans using Medicare Health Plan Employer Data and Information Set (HEDIS) clinical measures.

RESEARCH DESIGN

This was an observational study comparing HEDIS scores in for-profit and not-for-profit health plans that enrolled Medicare beneficiaries in the United States during 1997.

OUTCOME MEASURES

Outcome measures included health plan quality scores on each of 4 clinical services assessed by HEDIS: breast cancer screening, diabetic eye examination, beta-blocker medication after myocardial infarction, and follow-up after hospitalization for mental illness.

RESULTS

The quality of care was lower in for-profit health plans than not-for-profit health plans on all 4 of the HEDIS measures we studied (67.5% vs 74.8% for breast cancer screening, 43.7% vs 57.7% for diabetic eye examination, 63.1% vs 75.2% for beta-blocker medication after myocardial infarction, and 42.1% vs 60.4% for follow-up after hospitalization for mental illness). Adjustment for sociodemographic case-mix and health plan characteristics reduced but did not eliminate the differences, which remained statistically significant for 3 of the 4 measures (not beta-blocker medication after myocardial infarction). Different geographic locations of for-profit and not-for-profit health plans did not explain these differences.

CONCLUSION

By using standardized performance measures applied in a mandatory measurement program, we found that for-profit health plans provide lower quality of care than not-for-profit health plans. Special efforts to monitor and improve the quality of for-profit health plans may be warranted.

Age-Rationing in Health Care: Flawed Policy, Personal Virtue

The age-rationing debate of fifteen years ago will inevitably reemerge as health care costs escalate. All age-rationing proposals should be judged in light of the current system of rationing health care by price in the U.S., and the resulting pattern of excess and deprivation. Age-rationing should be rejected as public policy, but recognized as a personal virtue of stewardship among the elderly.

The distributional consequences of a Medicare premium support proposal

This article analyzes the distributional consequences of enacting a particular premium support proposal known as Breaux-Frist I. Under the proposal, the federal government would contribute a certain amount toward the purchase of Medicare coverage, based on the premiums charged by different health plans. Beneficiaries could choose something akin to the traditional fee-for-service option or a privately sponsored ealth plan such as a health maintenance organization. The article simulates the expected distributional impacts in three areas: among beneficiaries who choose to retain fee-for-service coverage, between different geographic areas, and according to various beneficiary characteristics. We find that the legislation would result in increased premiums for beneficiaries remaining in the Medicare fee-for-service program as a result of unfavorable selection; lead to a geographic redistribution in premium payments, with those living in areas with high levels of Medicare expenditures paying more; and a much lower financial burden than is the case now for near-poor beneficiaries who do not have full Medicaid coverage. Finally, the article discusses how these results compare to those that may occur under the premium support demonstration project, beginning in 2010, established under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Risk segmentation related to the offering of a consumer-directed health plan: a case study of Humana Inc

OBJECTIVE

To determine whether the offering of a consumer-directed health plan (CDHP) is likely to cause risk segmentation in an employer group. STUDY SETTING AND DATA SOURCE: The study population comprises the approximately 10,000 people (employees and dependents) enrolled as members of the employee health benefit program of Humana Inc. at its headquarters in Louisville, Kentucky, during the benefit years starting July 1, 2000, and July 1, 2001. This analysis is based on primary collection of claims, enrollment, and employment data for those employees and dependents.

STUDY DESIGN

This is a case study of the experience of a single employer in offering two consumer-directed health plan options ("Coverage First 1" and "Coverage First 2") to its employees. We assessed the risk profile of those choosing the Coverage First plans and those remaining in more traditional health maintenance organization (HMO) and preferred provider organization (PPO) coverage. Risk was measured using prior claims (in dollars per member per month), prior utilization (admissions/1,000; average length of stay; prescriptions/1,000; physician office visit services/1,000), a pharmacy-based risk assessment tool (developed by Ingenix), and demographics.

DATA COLLECTION/EXTRACTION METHODS

Complete claims and administrative data were provided by Humana Inc. for the two-year study period. Unique identifiers enabled us to track subscribers' individual enrollment and utilization over this period.

PRINCIPAL FINDINGS

Based on demographic data alone, there did not appear to be a difference in the risk profiles of those choosing versus not choosing Coverage First. However, based on prior claims and prior use data, it appeared that those who chose Coverage First were healthier than those electing to remain in more traditional coverage. For each of five services, prior-year usage by people who subsequently enrolled in Coverage First 1 (CF1) was below 60 percent of the average for the whole group. Hospital and maternity admissions per thousand were less than 30 percent of the overall average; length of stay per hospital admission, physician office services per thousand, and prescriptions per thousand were all between 50 and 60 percent of the overall average. Coverage First 2 (CF2) subscribers' prior use of services was somewhat higher than CF1 subscribers', but it was still below average in every category. As with prior use, prior claims data indicated that Coverage First subscribers were healthier than average, with prior total claims less than 50 percent of average.

CONCLUSIONS

In this case, the offering of high-deductible or consumer-directed health plan options alongside more traditional options caused risk segmentation within an employer group. The extent to which these findings are applicable to other cases will depend on many factors, including the employer premium contribution policies and employees' perception of the value of the various plan options. Further research is needed to determine whether risk segmentation will worsen in future years for this employer and if so, whether it will cause premiums for more traditional health plans to increase.

Consumer choice of social health insurance in managed competition

OBJECTIVE

To promote managed competition in Dutch health insurance, the insured are now able to change health insurers. They can choose a health insurer with a low flat-rate premium, the best supplementary insurance and/or the best service. As we do not know why people prefer one health insurer to another, we investigated their reasons for selecting their health insurer and assessed the importance of the supplementary benefit package and the flat-rate premium.

METHODS

A self-administered questionnaire was completed by 468 of a total of 884 (52.9%). Data were compared among three groups. The first group comprised those who left one health insurer for another (exit). The second group had joined the health insurer (entry) and the third group comprised those who did not switch (stayers).

RESULTS

Those in the entry group were statistically significantly less satisfied with their former insurance organization than those in the other groups (exit and stayers) with the insurance organization under investigation. They were also less satisfied than the other groups in respect of the flat-rate premium. Those in the exit group were younger and seemed to be in better health. In general, the insured were only aware of small differences between health insurance funds and the three groups did not differ from each other in this respect. About a quarter of the entry group reported the flat-rate premium as a reason for selecting a particular health insurance fund. However, the most frequently reported reason, for both exit and entry, was the benefit package of the supplementary insurance.

CONCLUSIONS

In the absence of clear differences between insurance organizations, the advantages of managed competition maybe too difficult to achieve.

Use of high-cost operative procedures by Medicare beneficiaries enrolled in for-profit and not-for-profit health plans

BACKGROUND

It is widely believed that for-profit health plans are more likely than not-for-profit health plans to respond to financial incentives by restricting access to care, especially access to high-cost procedures. Until recently, data to address this question have been limited.

METHODS

We tested the hypothesis that the rates of use of 12 common high-cost procedures would be lower in for-profit health plans than in not-for-profit plans. Using standardized Medicare HEDIS data on 3,726,065 Medicare beneficiaries 65 years of age or older who were enrolled in 254 health plans during 1997, we compared for-profit and not-for-profit plans with respect to rates of cardiac catheterization, coronary-artery bypass grafting, percutaneous transluminal coronary angioplasty, carotid endarterectomy, reduction of femur fracture, total hip replacement, total knee replacement, partial colectomy, open cholecystectomy, closed cholecystectomy, hysterectomy, and prostatectomy. We adjusted the comparisons for sociodemographic case mix and for characteristics of the health plans other than their tax status, including the plans' location.

RESULTS

The rates of carotid endarterectomy, cardiac catheterization, coronary-artery bypass grafting, and percutaneous transluminal coronary angioplasty were higher in for-profit health plans than they were in not-for-profit health plans; the rates of use of other common costly operative procedures were similar in the two types of plan. After adjustment for enrollee case mix and other characteristics of the plans, the for-profit plans had significantly higher rates than the not-for-profit plans for 2 of the 12 procedures we studied and had lower rates for none. The geographic locations of the health plans did not explain these findings.

CONCLUSIONS

Contrary to our expectations about the likely effects of financial incentives, the rates of use of high-cost operative procedures were not lower among beneficiaries enrolled in for-profit health plans than among those enrolled in not-for-profit health plans.

Employer contribution methods and health insurance premiums: does managed competition work?

We derive a two-stage model in which health plans first compete to be selected by employers and subsequently compete to be chosen by employees. We identify the key determinants of competition and show that increasing competition at one stage often comes at the expense of competition at the other stage. Many economists and policymakers have argued that in order to increase competition among health plans, employers should offer multiple plans and structure premium contributions to make employees more price sensitive. While our theoretical model shows that following this policy prescription may not actually lead to lower premiums, our empirical analysis provides some support for this recommendation. We also find that if employers instead pay the full premium, premiums increase when they offer additional plans. These results have important implications for both employers and policymakers.

A cautionary tale: the dysfunction of American health care

Attempts to reform the US health care system in the 1980s and 1990s were inspired by the system's inability to adequately provide access, ensure quality, and restrain costs. In the era of managed care, after the Clinton administration's failed legislative effort at reform, access, quality, and costs are still problems, and medical professionals are increasingly dissatisfied. To aid understanding of why the system is now so dysfunctional, I have drawn upon discussions with thoughtful physicians about their direct experience. They raised important concerns not usually considered by health care reformers. Their central concern was about the abandonment of medicine's core values. They felt that health care has become dominated by large, bureaucratic organizations which may not honor these core values. Patients and physicians are often caught in conflicts between competing interests and demands. Those who work in health care may be subject to perverse incentives that discourage ethical practice. Health care leaders may be ill-informed, incompetent, self-interested, or even dishonest. Examples of attacks on the scientific basis of medicine have become more frequent. These worrying trends are not confined to the US. Physicians elsewhere should be skeptical of approaches to health care reform derived from the American model. European doctors should ensure the new health care initiatives do not undermine their core values or the best interests of their patients.

Employee demand for health insurance and employer health plan choices

Although most private health insurance in US is employment-based, little is known about how employers choose health plans for their employees. In this paper, I examine the relationship between employee preferences for health insurance and the health plans offered by employers. I find evidence that employee characteristics affect the generosity of the health plans offered by employers and the likelihood that employers offer a choice of plans. Although the results suggest that employers do respond to employee preferences in choosing health benefits, the effects of worker characteristics on plan offerings are quantitatively small.

Rationing and the role of the emergency department as society's safety net

Emergency medicine has an integral role in the establishment of universal access to health care for all persons living in the United States. Currently, emergency departments provide the only unfunded mandate available to millions of American residents who otherwise have no access to health care coverage. Any effort to establish universal care must accept health care rationing as a basic principle, and establish a minimum standard of benefits to which all human beings are entitled in this country. People and employers should be allowed to purchase additional care based on their willingness and ability to pay, but under no circumstances should anyone be denied a basic package of health care benefits. Emergency care must be part of those basic benefits. Emergency medicine charges should be structured so that they are not unduly onerous to society, and should reflect true expenses, including marginal costs for nonurgent care. Emergency physicians (EPs) and hospital administrations should recognize their critical role in serving society in roles that are not strictly medical, and allocate resources to benefit the general population in the greatest way. This role will be expanded to include preventive care, to provide for basic pharmacologic coverage as needed, and to provide necessary immunizations when traditional primary care has failed. We have a moral obligation to recognize that resources are limited and to allocate them so as to benefit the greatest number of patients in the greatest way. As members of the medical profession best equipped to assume such a task, it is incumbent upon EPs to act as advocates to the public to enable us to fulfill this mission.

Consumers versus managed care: the new class actions

The plaintiffs in pending consumer class-action lawsuits against health maintenance organizations (HMOs) should fail in their claims for damages for fraud under federal anti-racketeering legislation. Although HMOs have regularly failed to disclose their business methods and have not strictly honored their contractual coverage promises, the circumstances in which they introduced cost controls into a market sadly lacking them suggest motives not deserving punitive sanctions. Courts could easily find that HMOs violated the Employee Retirement Income Security Act (ERISA), however. Injunctive relief compelling more extensive disclosures and clearer contracts might well legitimize HMOs' methods and generally improve the performance of the health care marketplace.

On the "efficiency" of managed care plans

The claim that managed care plans are more efficient than fee-for-service plans has been made so often that it has reached the status of folklore, but the evidence is inconclusive. The claim is usually based on one or both of the following errors: (1) lower medical care costs mean lower total costs (medical plus administrative costs) and (2) lower HMO premiums mean HMOs are more efficient than fee-for-service plans. The first assertion ignores evidence indicating that managed care has driven up administrative costs for both insurers and providers. The second ignores evidence that managed care plans have numerous methods of shifting costs that are unavailable or less available to fee-for-service plans. The lull in health care inflation during the mid-1990s is often cited as evidence that managed care is efficient. But the lull may have been caused not by the spread of managed care but by the near-simultaneous occurrence of four events: a downturn in the insurance underwriting cycle, the 1990-1991 recession, endorsement of managed competition by numerous politicians, and the merger fever triggered by those endorsements.

Employers: quality takers or quality makers?

This article provides a synthesis of past research to help understand the extent to which employers are using their considerable market power to drive health care quality. Are employers quality takers or quality makers? The literature provides some clues about aspects of quality employers are attempting to influence, strategies they are pursuing to influence quality, and their impact. Some employers are interested in some indicators of quality and are incorporating them in a variety of different purchasing strategies. The indicators most frequently used by employers, however, probably are not the ones that clinical experts and policy makers would select as most reflective of clinical quality. It appears that employers as a group are becoming more informed quality takers but are not yet quality makers--with the exception of a few well-resourced outliers. Recent events provide mixed signals about whether the future employer role in influencing quality will diminish, stall, or flourish.

How resource allocation decisions are made in the health care market

This paper describes how economists view resource allocation decisions in health care markets. The basic economic decisions that must be made in any economic system and the resource allocation decisions in a perfectly competitive market are described. An idealized market can achieve an efficient allocation of resources and is contrasted with a more realistic description of the numerous ways in which health care markets depart from the perfectly competitive ideal. The implications of these departures for health care policy are discussed, along with key controversies concerning reliance upon markets for resource allocation in health care. In particular, the failure of competitive markets to achieve what many consider an equitable distribution of health care is emphasized. The paper concludes with some practical observations on how pharmacists can use the increasing emphasis on economic efficiency to the advantage of their profession.

Newly implemented health system reform in Israel: physicians' attitudes

OBJECTIVE

To explore the attitudes of Israeli physicians towards the feasibility and potential consequences of the newly implemented health care reform.

DESIGN

Physicians' attitudes were examined soon after the enactment of a National Health Insurance Law, the first element of the reform to be implemented.

SETTING

A nationwide mail survey.

SUBJECTS

A random sample of 2000 practicing physicians.

MAIN OUTCOME MEASURES

Attitudes towards the health care system prior to the reform; predicted effects of the reform on health care and medical practice.

RESULTS

Most of the respondents think that the system requires a change. Quality of community-based care is expected to increase, in contrast to hospital care. The reform is believed to exert an adverse effect on medical practice. Attitude is significantly influenced by practice setting and speciality: community setting and general practice correlate with less desire for a major change. Specialists believe that reform elements which will shift the balance towards the hospitals will have the greatest benefit on the health system. GPs, compared to specialists, are more optimistic regarding quality and accessibility of services (P<0.01).

CONCLUSIONS

Our survey suggested that Israeli physicians favor a change in the health care system, despite a perceived adverse effect of the reform on medical practice. Since the reform is believed to shift the balance from the hospitals to the community, respondents support changes that will compensate for the imbalance.

Waiting for Godot: wishes and worries in managed care

Managed care has done a better job at reducing expenditure growth than it has in improving quality. Although reduced expenditure growth is not appreciated by many, it has real benefits. For the majority of Americans who are privately insured, it results in greater disposable income for goods and services other than health care (although the illusion of employer-paid health insurance obscures this reality for many). For Medicaid programs, slower growth of expenditures facilitates efforts at expanding coverage. For low-income workers, slower expenditure growth results in larger numbers of people retaining insurance coverage than would have been the case if premiums rose more quickly. While there are some victories to which managed care organizations can point, we cannot credibly argue that overall levels of quality and health outcomes are improving as the health care system is massively disrupted by changes in health care finance and delivery. The disruptions create real hardships for some physicians and other health care workers, and worries for many consumers. These worries fuel the managed care backlash. The danger is that politicians will respond to these worries with policies that inhibit the development of high-quality delivery systems. The opportunity is for relatively modest public policy changes--external review organizations, better public-sector purchasing capabilities, public investment in producing and publicizing information on health plan and medical group performance, and establishment of a public ombudsperson--to respond to consumer worries and lead to improvements in health care quality and outcomes. Finally, I would be remiss without a reminder that the single most effective action politicians could take to improve health care quality and outcomes would be to change the rules of health care financing to assure that all Americans are covered by managed care. Even with all of its inadequacies, managed care is much superior to the patchwork care available to the 43 million Americans who are uninsured. The managed care backlash is concerned with protecting patients who are insured (and their providers). Far more valuable would be to protect those without insurance. Sadly, no politician has yet figured out how to do this. Still waiting.

Perceptions of medical school seniors of the current changes in the U.S. health care system

Perceptions of medical school seniors about changes occurring in the health care environment were investigated. A survey was completed by 196 Jefferson Medical College seniors in the class of 1997. Of the respondents, 79% believed that cost reduction rather than quality of care is the primary consideration behind recent changes, 78% felt that managed care organizations hamper physicians' abilities to render optimal care, 83% maintained that the control of health care by insurance companies would lead to lower quality of care, 69% agreed that patients should have the freedom to seek a specialist's care without being referred by a primary care physician, 82% recommended that mentally ill patients should be referred to a mental health professional, and 82% believed that learning to work in a managed care environment should be an essential component of medical education. Assessment of student perceptions can assist in the development and implementation of appropriate curricular changes.

State health insurance initiatives: what the literature is telling us

The absence in the United States of a comprehensive national health insurance system has left a significant number of people either without coverage or with only partial (and inadequate) coverage. Individual states have sought to remedy this through a number of initiatives, but the majority have been incremental in nature, not universal. Sifting through the extensive literature on what states are doing and have been doing, the author reveals the nature of their attempts (and their infrequent successes) and provides issues and questions that must be dealt with before a system acceptable--and accessible--to all can be achieved.

Reforma do Estado e reforma de sistemas de saúde: experiências internacionais e tendências de mudança

Este texto discute a agenda de reforma do Estado, avaliando seus eixos centrais e dificuldades de implementação; identifica as traduções que adquire nos modelos que vêm sendo implementados na área de saúde e analisa as reformas de alguns países (EUA, Reino Unido e Colômbia). Aponta ainda as perspectivas que se desenham como tendências nas propostas de reforma setorial no Brasil, vis a vis a experiência internacional, onde a idéia de separação de funções de financiamento e execução tem prosperado, enquanto a de introdução de mecanismos competitivos na alocação de recursos financeiros tem sido objeto de várias críticas. Além disso, discute esses mecanismos em termos de eficiência e eficácia e da capacidade regulatória do Estado. Reflete sobre o quanto os países latino-americanos têm sido mais radicais nos seus processos de reforma, mesmo partindo de condições muito precárias e estando submetidos a constrangimentos financeiros e importante subfinanciamento setorial. Aponta como tendência, na América Latina, possibilidades de desmonte dos sistemas anteriores, sem garantia de melhoras substantivas na cobertura e na eqüidade, seja pelo radicalismo do processo, seja pelo alto grau de experimentalismo com que as reformas estão sendo implementadas.

The health policy community and health-care reform in the US

The failure of comprehensive health-care reform during the Clinton administration (1993–4), has been attributed to many causes: structural features of the American political system, congressional gridlock, interest group opposition, President Clinton and his administration, even the ‘system’ itself. This article proposes an additional perspective: the views of the health policy community. Based on the work of Kingdon, Heclo and Walker, we suggest that fragmentation within the health policy community, particularly over policy solutions, was a contributing factor in the failure of healthcare reform. Our survey of health policy elites found that there was substantial agreement on problems of the health-care system coupled with substantial disagreement, based largely on ideology, about what to do about those problems. We also compared health policy elite views with those of the public. We found that, for the most part, the public and the elites disagreed on problems; however, they agreed on incremental changes, some of which were later enacted into law.

Possible objectives and resulting entitlements of essential health care packages

The notion of a defined 'core package of essential health care services' has appeared in many different health reform proposals in the 1990s. This paper attempts to explore the possible objectives of the 'core package' component of health care reform. Two board applications are apparent: the use of essential packages to ration scarce public funds and the incorporation of a minimum benefit package into 'managed competition' type reforms, where they constitute a mandated minimum level of private insurance cover. Eight possible objectives for an essential benefit package are described: To protect against catastrophic illness events; to ensure social risk pooling; to improve allocative efficiency in the health system; to eliminate 'high burden of disease' conditions; to improve equity of access to services; to combat cost-escalation; to encourage competition between insurers; and to facilitate public participation and transparency in decision making. Closer examination of objectives reveals that they often conflict, which suggests that a clear understanding of the purpose of reform is essential before it is worthwhile devoting energy to the development of essential benefit packages. It is argued that two main clusters of objectives emerge from the eight described, representing Rawlsian (risk avoidance) and utilitarian (efficiency improvement) social welfare philosophies, respectively. Practical experience suggests that priority setting exercises have been unsuccessful in meeting efficiency objectives, but that they may well be quite useful in fulfilling risk-pooling aims.

Protecting patient welfare in managed care: six safeguards

The public is very suspicious and fearful that managed care threatens their health because of its interest in reducing costs. Because physicians' decisions control 75 percent of all health care spending, managed care organizations are focusing their cost-cutting strategies on influencing physician decision making through financial incentives and guidelines. These two techniques have had some important contributions, especially in enhancing efficiency and standardizing care to a high level. Nevertheless, they pose a threat--and are perceived by the public to pose a threat--to patients' health and well-being. How can we mitigate the threats to patient welfare posed by financial incentives and guidelines? We propose and analyze six safeguards. These safeguards are not an attempt to revive the fee-for-service system, but an effort to make managed care ethical and to focus it on improving patient welfare. They are designed to work together to ensure that patient welfare remains the primary focus of managed care organizations; they try to create institutional structures that emphasize quality over mere cost reductions.