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

Rethinking the selfare state 108
consumers and smaller employers in purchasing health care insurance from private
insurers. 63 The idea was that with only one Alliance permitted in any particular region,
each would control enough of the market to negotiate affordable insurance plans that
would meet minimum quality requirements. With respect to competition among insurers,
Clinton’s proposal required that individuals would have an opportunity to choose a new
insurer on an annual basis if they so desired. To facilitate effective decision-making,
citizens would be provided with information on the performance of each insurer in terms
of the satisfaction levels of their enrollees, their ratings on nationally approved quality
indicators, and any restrictions within their policies on choice of and access to
providers. 64 Additionally, it would be the responsibility of the Alliances to ensure that
insurers were competing on price and quality rather than on their ability to avoid highrisk
patients. In fact, insurers would be prohibited from risk-rating patients and charging
higher premiums to those with higher ratings except with the express permission of the
Alliance. 65
The features of President Clinton’s health proposal outlined above clearly distinguish
it, in various ways, from either the Canadian or UK models. First is its resulting incentive
structure—one that is arguably superior to those in either of these other two countries. As
previously discussed, the single-payer/fee-for-service model creates perverse incentives
for consumers, physicians, and hospitals. The purchaser/provider split model has also
been criticized for failing to create effective incentives for the DHAs to purchase services
from those providers who are most efficient. With managed competition, however,
private health plan providers are extremely conscious of costs and will constrain primary
and secondary care providers with whom they in turn contract accordingly, yet at the
same time they are obligated to provide a state-defined minimum level of services. Thus,
it may be more likely than the other two models to reach an optimal balancing of costreduction
and allocation of needed services. 66 A second issue that may be more
effectively dealt with by the managed-care system is that of the effective generation of
competition. The single-payer/fee-for-service model has done little if anything to foster
efficiency through competition and unlike the purchaser/provider split model, Clinton’s
proposal ensures substantial competition because health plan providers or insurers are
competing directly for the dollars of the end-users rather than relying on historical
relationships with DHAs. Insofar as preferences are accounted for, the single-payer/feefor-service
model clearly provides the most choice in that it places no restrictions on
which doctor a user must see. Among the other two systems, each has its strengths and
weakness. While the purchaser/ provider split model has until recently allowed patients to
choose any GP from the NHS list, choice among hospitals and specialists is more limited.
In contrast, the managed-competition model allows users to switch insurers annually but
these insurers may limit their choice of doctors to a specifled list. Finally, perhaps one
deficiency of Clinton’s proposals is the lack of encouragement of the use of GPs as
gatekeepers to the health care system. Both the Canadian and British health care systems
have heavily emphasized primary care as a means of containing health care budgets but
the US system has always allowed for direct access by patients to more expensive
specialists; the managed-competition plan does nothing to change this. However,
managed-competition does promote efficiency through competition and it is likely that
health care providers themselves will choose to place a greater emphasis on primary care
as a means of increasing the efficient delivery of services.