Rethinking the Welfare State: The prospects for ... - e-Library

Health care 107
Managed competition
US
In 1992, Bill Clinton campaigned for the presidency of the United States on a platform
that included as a key plank an ambitious reorganization of the health care delivery
system. His vision was for the country to adopt a system that ensured universal access to
a comprehensive range of health care services in a manner roughly analogous to the
managed competition model being implemented in Germany and the Netherlands. 59
Although Clinton’s Health Security Act appeared to address the significant problems that
had prompted the need for national health reform—concerns of the uninsured 60 and cost
containment—the plan nevertheless failed. While partisan politics, the strength of the
health care lobbies, the inexperience of the Clinton administration, and the complexity of
the plan all played a role in the its demise, Sherry Glied has asserted that these factors
alone cannot account for the failure of the effort. Rather, she argues that the real basis for
the plan’s failure stemmed from three distinct sources. 61 First were the irreconcilable
differences between the two main groups of reformers, supporters of single-payer reform
and supporters of market-oriented, managed competition. While the former believe that
health care has a unique quality that distinguishes it from other goods and services and
thus cannot be allocated by way of the market, the latter view health care as a good like
any other and favour delivery by way of the market. In the end, although the two groups
were brought together to attempt to find a compromise between the two ideals, neither
was willing to yield to the other. Second were the false assumptions about health care
spending and the health sector made by these two groups. The supporters of single-payer
reform failed to recognize that a centrally organized health care system would be too
inflexible and would respond too slowly to inevitable and desirable changes in health
care technology and patient preferences. Supporters of market-oriented, managed
competition, however, were unable to acknowledge that the market solution has difficulty
addressing the distributional concern, namely that it cannot guarantee adequate universal
coverage and health security. Finally, neither group was able to address successfully the
financing of health care reform. Although Clinton’s proposed reforms were never
implemented, certain features may have been viable and are thus worth examining for the
purposes of a comparative analysis.
The Clinton model of managed competition would have been superimposed upon a
predominantly private health care services and insurance system (although it should be
noted that over 40 percent of the US health care system is publicly funded). Mandatory
coverage would be provided to employees and their dependents primarily through
employer mandates (with employers meeting 80 percent of costs and employees 20
percent) and public subsidies for low-wage firms and low-income individuals to assist in
the purchase of health insurance. Employer-provided health insurance would continue to
be non-taxable as an employment benefit and deductible as a business expense by
employers. Clinton’s plan required government-appointed sponsors (referred to in the
initial proposal as “Health Insurance Purchasing Co-operatives” and in subsequent
amendments as “Regional Alliances”) to act as intermediaries between consumers and
insurers. 62 Funding from government, employers and consumers would be funnelled
through the Alliances, which would consolidate the purchasing power of individual