Health Care in an Era of Managed Competition

By Blumengold, Jeffrey G.; Zeman, Michelle M. | The CPA Journal, November 1993 | Go to article overview
Save to active project

Health Care in an Era of Managed Competition

Blumengold, Jeffrey G., Zeman, Michelle M., The CPA Journal

The current climate of health care reform presents an ideal opportunity for employers, health care providers, insurers, and consumers to react to the transformations now occurring in the health care system, and to reevaluate their evolving roles, their interrelationships with one another, and their mutual involvement in every aspect of health care delivery: its cost, its quality, and its impact on patient satisfaction.

With the Clinton Administration beginning to expose the details of its plan for health care reform, the concept of managed competition will be a key ingredient to remedy our ailing, often inaccessible, and increasingly costly healthcare system.

Managed competition is an idea conceived by Alain C. Enthoven of Stanford University, nurtured by an informal think tank of health care professionals in Jackson Hole, Wyoming, and adopted as the basis of the Clinton Administration's health care reform package. It is a market-driven policy of regulated competition among insurance companies, with incentives for insurance carriers, physicians and other health care providers to improve quality, increase benefits, expand access, and control costs.

The pivotal idea within managed competition is the creation of large regional Health Insurance Purchasing Cooperatives (HIPC's), which would negotiate and coordinate health care coverage. These consortiums of employers and individual consumers, by virtue of the numbers of individuals they represent (in the hundreds of thousands or more), would have the leverage and the buying power necessary to generate healthy competition among health care plans. Premium costs would be borne by both employers and employees (probably in an 80/20 ratio), with the Federal government paying for the unemployed and those covered by Medicaid. Medicare could also be incorporated into the system at some point. HIPC's would pay annual fees to contracted health care plans based on enrollment; individuals would be able to choose from several health care plans, and would not have to change plans when changing jobs.

In The Logic of Health Care Reform, Paul Starr discusses three elements integral to managed competition's endurance:

1. Standard benefits to guarantee a minimum level of coverage (hospitalization, surgery, and office visits) and to facilitate comparisons of quality and value between health care plans;

2. Risk adjustment to require plans to accept all applicants, regardless of an preexisting medical conditions; premium amounts would be determined by each state under a community rating system, guaranteeing that the same premium would be charged to all, regardless of age, sex or prior medical history;

3. Price competition to compel plans to provide specific cost information to consumers and employers; tax credits for employers would only apply to the cost of the least expensive plan; more comprehensive packages would be available to consumers at additional cost.

Such major changes to the health care system under managed competition will impact most intensely on the traditional, independent, fee-for-service physician.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Health Care in an Era of Managed Competition


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?