Choices in health care: what are they and what are they worth?

This overview article provides a conceptual introduction to this special issue on health care choices, containing four main papers originally commissioned in 1997 for a conference titled "The Power of Choice in the Health Care Marketplace and Its Consequences," sponsored by the Robert Wood Johnson Foundation under its Changes in Health Care Financing and Organization (HCFO) program and conducted by the Alpha Center on November 19, 1997. Drawing on information from these four papers, the authors discuss what factors affect the different choices we face, highlighting the fact that different players in the health care system face diverse and often conflicting choices and trade-offs. The authors then examine the consumer choice model and its premise that when consumers are presented with adequate information about these different choices, they will make selections about plans, providers, and health insurance that will move the health care system toward a higher quality/lower cost equilibrium.

Defining competition in markets: why and how?

OBJECTIVE: To examine the variety of perspectives from which to study the measurement of competition in the healthcare marketplace. Based on a meeting held by The Robert Wood Johnson Foundation in 1996, the authors discuss the complications inherent in the way markets and products are defined by key stakeholders, including economists, policymakers, federal antitrust officials, purchasers, and the competitors themselves. CONCLUSION: The consensus among those who study this issue is that the way competitors, markets, and geographic areas are currently defined, and the ways of measuring competition, are inadequate, due mainly to the fact that both the measures and the definitions have been constructed from very limited data. Confounding this is the fact that analyses of competition are undertaken for such a wide variety of uses and that creating one database to solve the problems mentioned can be extremely daunting. RECOMMENDATIONS: Future research should examine ways to develop better definitions of the new healthcare structures that are competing with each other and ways to create measures of competition that include these new structures. To remedy gaps in the ability to measure competition, the field might also benefit from a public use data file, similar to the Area Resource File (ARF), that would contain HMO data according to geographic area, as well as provider data, employer data, payer data, and sociodemographic data.

Are health-based payments a feasible tool for addressing risk segmentation?

As they attempt to increase health insurance coverage and improve the efficiency of the market, researchers, policymakers, and health plan representatives have been addressing the issue of risk segmentation. Many risk assessment tools and risk-adjusted payment methodologies have been developed and demonstrated for a variety of populations and payers experiencing various market constraints. The evidence shows that risk-adjusted payments are feasible for most populations receiving acute care, while technical obstacles, political issues, and some research gaps remain.

Risk selection in the health care market: a workshop overview.

In a voluntary health insurance market, risk selection poses serious and increasing problems. Responding to this concern, the Robert Wood Johnson Foundation sponsored an invitational meeting for public and private decision makers to understand the incentives for risk selection in the health insurance market and to discuss options for reducing risk selection practices. The meeting, held October 6, 1994, provided a framework for exploring this timely issue and served as a vehicle for understanding how health care reforms, such as insurance market regulation and risk adjustment mechanisms, both can reduce and exacerbate incentives for risk selection. This article sets the context for the three commissioned papers that follow; it summarizes the ideas presented and issues identified for future consideration. Failure to address risk selection will continue to have serious consequences both for access to care for vulnerable populations and for the financial viability of health plans.

Managing the health care system under a global expenditure limit: a workshop summary.

There is ongoing debate as to whether global budgets, or expenditure limits, are compatible with a strategy for managed competition. The Robert Wood Johnson Foundation sponsored an invitational conference for public and private policymakers to discuss the issue. The meeting's purpose was to explore how global expenditure limits might work and what their implications would be for costs, access, and quality of health care. This article summarizes the ideas presented at the conference, looking in particular at global expenditure limit models in Germany and Canada. Overall, the papers and presentations at this meeting demonstrated that global expenditure limits have the potential to provide the necessary fiscal discipline to manage the health care system and provide a greater degree of certainty and accountability for payers, providers, and patients. However, it is also clear that without a common set of principles about the role health care should play in our society and an agreed upon framework of governance for the system, it will be difficult for the United States to resolve the detailed and complex implementation and administration issues of a reformed health care system.

Administrative costs in the U.S. health care system: the problem or the solution?

The estimates of potential savings as a result of reductions in administrative costs have generated considerable controversy. In response to this debate, the Robert Wood Johnson Foundation sponsored an invitational workshop for policymakers, health services researchers, and key stakeholders in the health care system. The workshop, conducted by the Alpha Center in February this year, provided a framework for identifying, measuring, and weighing the value of administrative costs and served as a vehicle for discussion of these issues. This article summarizes the presentations, the issues raised, and questions for further research. Overall, the papers and presentations emphasized that while the focus of attention has been on the controversy over whether particular aggregate estimates of administrative costs and potential savings are correct, the fundamental underlying issue is how the health care system might best be managed.