Market Reforms in Health Care: Current Issues, New Directions, Strategic Decisions

Market Reforms in Health Care: Current Issues, New Directions, Strategic Decisions

Market Reforms in Health Care: Current Issues, New Directions, Strategic Decisions

Market Reforms in Health Care: Current Issues, New Directions, Strategic Decisions

Excerpt

The principal problem in health care today is the need for a workable mechanism to achieve a proper balance between acceptable cost and an ensured level of quality. At the core of the trade-off between cost and quality faced by consumers, employers, and state and federal governments is the question of how to pay the providers of health care enough to get them to supply services, but to do so in a way that is affordable for those paying the bill.

This book examines the potential of a new approach to controlling health care costs that features market reforms based on incentives. This approach stresses the need for fair, cost-conscious choices among alternative health plans for consumers and prudent buyer concepts for bill payers. By altering the system of incentives to which providers, insurers, and consumers respond, market-oriented proposals strive to reduce costs while maintaining or enhancing the quality of care and access to it. In place of government regulation of providers, these plans would induce providers to hold down costs because people who chose such providers would reap the savings, while those who chose inefficient providers would pay the extra cost.

Thus, arbitrary cost control is not the core challenge in health care today. The real challenge is to devise methods of cost management that are not inextricably tied to unacceptable service cutbacks or benefit restrictions. The answer lies in finding ways to isolate waste, deny payment for unnecessary care, induce providers to offer services in an efficient way, and induce beneficiaries (consumers) to seek cost-effective care. This book evaluates the potential of the incentives approach for achieving these objectives, isolates the problems facing this approach, and assesses the relative merits of alternative ways of overcoming these problems.

Cost increases associated with technological improvements, an aging population, changing consumer tastes and preferences, and general price inflation explain a considerable amount of the rising cost of care, and . . .

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