Competition in the health system: good news and bad news

Competition among health plans, hospitals, and physicians has taken place in fifteen health care markets primarily on the basis of price and secondarily on network breadth and style of care. In most markets, competition resulted in lower (or slowly growing) premium prices. Within a type of plan product, competition was leading to similar prices and networks and was reducing product differentiation among health plans. Competition was not taking place on the basis of measured and reported quality of care, which limited the capacity of employers and enrollees to make informed health plan choices. As a result, there was a substantial gap between competition as envisioned by the architects of the managed competition model and competition as it is evolving today.