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Managed competition of alternative delivery systems.

A Enthoven1

  • 1Stanford University.

Journal of Health Politics, Policy and Law
|January 1, 1988
PubMed
Summary

Health insurance markets often fail due to inherent issues, but structured competition, managed by sponsors, can improve efficiency and equity for populations. A truly free market in health insurance is not feasible.

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Area of Science:

  • Health economics
  • Market dynamics
  • Public policy

Background:

  • Health insurance and healthcare markets are prone to market failures.
  • Consumer and provider strategies can exacerbate inequity and inefficiency.

Purpose of the Study:

  • To explore the potential for managed competition to improve health insurance markets.
  • To analyze the role of sponsors in structuring competition.

Main Methods:

  • Analysis of market failures in health insurance.
  • Review of successful models of managed competition.
  • Examination of the role of sponsors (demand-side agents).

Main Results:

  • Health insurance markets are not naturally competitive and face significant market failures.
  • Sponsors can utilize specific tools to manage competition effectively.
  • Managed competition can lead to greater efficiency and equity for covered populations.

Conclusions:

  • A sophisticated understanding of competition is required for health insurance markets.
  • Active sponsorship is crucial for achieving desirable market outcomes.
  • The concept of a completely free market is incompatible with health insurance.

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