New Washington regime seeks to move from managed competition to more unfettered health care markets

Republicans take the reins of the federal government next month and are generally expected to repeal or at least revamp the Patient Protection and Affordable Care Act to harness market forces and competition to achieve the triple aim of better health care outcomes and patient satisfaction while lowering costs. Instead of the managed competition of the Affordable Care Act that put in place rules on the sell and buy sides of the health insurance market to promote competition and established government run markets for small group and individual coverage, the incoming Trump administration and new Congress will favor less managed competition with fewer market rules and constraints.

Achieving such a market environment is an enormous challenge given the heavily siloed health care system, with each silo having its own complex microeconomics. Cast as a market, health care has the essential element of many sellers and many consumers. Buyers ultimately drive the economics of all markets and determine their long term viability. But consumers generally don’t deal directly with health care providers given the large role of public and commercial health plans and employers. For the most part, people don’t plan to use health care, only doing so when accident or illness strikes. That precludes time for deliberate, considered comparison of providers and costs to determine the best value. Instead, consumers must deal with difficult to decipher bills filled with multiple, incremental charges after they consume health care services.

True market competition cannot function ex post facto transaction without some intermediary to negotiate terms and conditions on behalf of consumers. It remains to be seen how the new administration and Congress will finesse the complex microeconomics of health care as they seek to harness competitive forces to lower costs without resorting to even more extensive reforms than under the Affordable Care Act.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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Frederick Pilot

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1 Comment

  1. Patrick Pine

    The problem that advocates of market forces in health care will always have is that there is no definition of the products and services to be purchased. I can compare similar models of Ford vs. Chevy vs. Subaru. I can compare Special K to Cheerios. But I can’t really choose between a flu shot and a knee replacement or a colonoscopy.

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