Plus ça change: health sector reforms in Greece

Changes in the health care sector in Greece since the pathbreaking introduction of the National Health System (NHS) in 1983 have been sluggish. Twenty years after its inception and a series of attempts to reform it, the NHS remains centralized, fragmented in terms of coverage, and quite far removed from its principles of equity and efficiency. Being part of an idiosyncratic welfare state, the health care system is bound to reflect the particularities of Greek society and economy, namely, clientelism, a weak formal-and a thriving informal-economy, the lack of a strong administrative class, a weak labor movement, and strong organized interests. As a result, several ambitious reform plans have failed repeatedly owing to an array of interrelated economic, political, and social factors that channel potential changes toward the trodden path. This constellation creates unfavorable conditions for the introduction and implementation of major reforms.     

The private sector and competition in health care markets

This paper reviews the historical trends in the regulatory and competitive approaches to containment of health care costs, covering efforts in both public and private sectors. The current interest in the potential of private-sector initiatives to stimulate competition in health care insurance and provider markets is highlighted. Since neither the workings of competition in health care nor the role and impact of the private sector in stimulating such competition are well understood, the concluding section discusses important research issues surrounding these topics.     

ERISA, agency costs, and the future of health care in the United States

Because so many Americans receive health insurance through their employers, the Employee Retirement Income Security Act (ERISA) of 1974 plays a dominant role in the delivery of health care in the United States. The ERISA system enables employers and insurers to save money by providing inadequate health care to employees, thereby creating incentives for these agents to act contrary to the interests of their principals. Such agency costs play a significant role in the current health care crisis and require attention when considering reform. We evaluate the two major health care reform movements by exploring the extent to which each reduces agency costs. We find that agency cost analysis clarifies the benefits, limits, and uncertainties of each approach.     

National health policy: Efficiency-equity synchretism

A new emphasis in national health policy to encourage efficiency has been born in an environment of slower economic growth and an aging population. The increased reliance on market incentives to reduce health care costs does not signal the abandonment of equity as a social objective. To the contrary, the new emphasis on efficiency is intended to provide more and better health care through the generation of savings from the use of management systems to improve productivity. Market incentives and new management systems to increase efficiency are not the antithesis of equity but tools to provide better health care to the poor and to the elderly in an environment of fiscal constraints.     

Why hasn't integrated health care developed widely in the United States and not at all in England?

There have been influential advocates for financing and organizing health care in the United States and England based on the model of integrated health care delivery systems (IHCDSs). Despite good evidence that a few IHCDSs provide high-quality health care economically, such organizations are rare and localized in a few market areas in the United States and are absent in the English National Health Service (NHS). The explanation of why this is so includes various contributory factors: the way the development of the medical profession in each country pursued specialization; the division in British medicine between general practitioners and specialists; and the characteristics that we identify of established successful IHCDSs, which created formidable barriers to entry for a new IHCDS. This explains why currently the most promising organizational developments in U.S. health care are hybrids resulting from vertical integration. In England government policies of an "internal market," as adopted in the 1990s and currently, were and are based on a purchaser-provider split with the objectives that providers would compete and be funded by a system in which "money follows the patient." These policies recognize the division in British medicine, which also means that it is difficult to implement a reorganized English NHS based on high-performing IHCDSs.     

Any-Willing-Provider laws: their financial effect on HMOs

Any-Willing-Provider (AWP) legislation requires that health plans accept any health care provider who agrees to conform to the plan's conditions, terms, and reimbursement rates. Many states have adopted such legislation, raising questions about its effect on the managed care market. Those favoring this legislation argue that it will reduce restrictions on choice of provider, while opponents argue that it will reduce competition by increasing administrative and medical costs for managed care plans. Using cross-sectional time-series data for the period 1992-1995 (the period during which many of these laws were enacted), this study investigates the effect that these laws have on HMO financial performance. Our results show that "all-provider" AWP laws have a very limited effect on the financial performance measures we examine. "Pharmacy" AWP laws have a more significant effect, but neither type of law appears to affect the overall profitability of HMOs.     

Why some market reforms lack legitimacy in health care

Market-oriented health policy reforms in the 1980s and 1990s generally included five kinds of proposals: increased cost sharing for patients through user fees, the separation of purchaser-provider functions, management reforms of hospitals, provider competition, and vouchers for purchasing health insurance. These policies are partly derived from agency theory and a model of managed competition in health insurance. The essay reviews the course of reform in five countries that had a national health service model in place in the late 1980s: Italy, New Zealand, Spain, Sweden, and the United Kingdom. Special consideration is given to New Zealand, where the market model was extensively adopted but short lived. In New Zealand, surveys and polls are compared to archival records of reformers' deliberations. Voters saw health care differently from elites, and voters particularly felt that health care was ill suited to commercialization. There are similarities across all five countries in what has been adopted and rejected. Some market reforms are more legitimate than others. Reforms based on resolving principal-agent problems, including purchaser-provider splits and managerial reforms, have been more successful, although cost sharing has not. Competition-based reforms in financing and to a lesser extent in provision have not gained legitimacy. Most voters in these countries see health care as different from other parts of the economy and view managerial reforms differently from policies that try to make health care more like other sectors.     

Explaining health care system change: problem pressure and the emergence of "hybrid" health care systems

In this article, we will further the explanation of the state's changing role in health care systems belonging to the Organisation for Economic Cooperation and Development (OECD). We build on our analysis of twenty-three OECD countries, which reveals broad trends regarding governments' role in financing, service provision, and regulation. In particular, we identified increasing similarities between the three system types we delineate as National Health Service (NHS), social health insurance, and private health insurance systems. We argue that the specific health care system type is an essential contributor to these changes. We highlight that health care systems tend to feature specific, type-related deficiencies, which cannot be solved by routine mechanisms. As a consequence, non-system-specific elements and innovative policies are implemented, which leads to the emergence of "hybrid" systems and indicates a trend toward convergence, or increasing similarities. We elaborate this hypothesis in two steps. First, we describe system-specific deficits of each health care system type and provide an overview of major adaptive responses to these deficits. The adaptive responses can be considered as non-system-specific interventions that broaden the portfolio of regulatory policies. Second, we examine diagnosis-related groups (DRGs) as a common approach for financing hospitals efficiently, which are nevertheless shaped by type-specific deficiencies and reform requirements. In the United States' private insurance system, DRGs are mainly used as a means of hierarchical cost control, while their implementation in the English NHS system is to increase productivity of hospital services. In the German social health insurance system, DRGs support competition as a means to control self-regulated providers. Thus, DRGs contribute to the hybridization of health care systems because they tend to strengthen coordination mechanisms that were less developed in the existing health care systems.     

Improving direct-care compensation in nursing homes: Medicaid wage pass-through adoption, 1999-2004

Because states play such a prominent role in the U.S. health care system, they have long grappled with how to best control health care costs while maintaining high quality of care. There are many policy tools available to address efficiency and quality concerns--from pure state regulation to market-oriented competition designs. Given public discourse and official party platforms, one would assume that states controlled by Democrats would be more likely to adopt regulatory reforms. This study examines whether party control, as well as other economic and political factors, is associated with adopting wage pass-through (WPT) policies, which direct a portion of Medicaid reimbursement or its increase toward nursing home staff in an effort to reduce staff turnover, thereby increasing efficiency and the quality of care provided. Contrary to expectations, results indicate that states with Republican governors were against WPT adoption only when for-profit industry pressure increased; otherwise, they were more likely to favor adoption than their Democratic counterparts. This suggests a more complex relationship between partisanship and state-level policy adoption than is typically assumed. Results also indicate that state officials reacted predictably to prevailing political and economic conditions affecting state fiscal-year decisions but required sufficient governing capacity to successfully integrate WPTs into existing reimbursement system arrangements. This suggests that WPTs represent a hybrid between comprehensive and incremental policy change.     

Coexistence, conflict, and cooperation: public policies toward medical devices

Medical devices include thousands of products, many of which have greatly contributed to the quality of health care. As devices have proliferated, so have public policies that affect them. The federal government intervened to promote three fundamental values: safety by federal regulation, innovation through federal funding of research and development, and access by providing services under Medicare. The policies generally coexisted without conflict. However, two recent developments--the advent of cost containment and the expansion of the tort liability system--present a potentially disruptive influence on these policies, and threaten to undermine the values they serve. Because cost restraints are inevitable and the tort system provides consumer protection, the challenge for policymakers is to reconcile them with the values of safety, innovation, and access. The proposals presented here seek to promote coordination to protect those values without imposing unacceptable costs on the health care system.     

The labor impacts of policy change in health care: how federal policy transformed home health organizations and their labor practices

Health care organizations are highly labor-intensive; policies designed to stimulate organizational change are likely to have labor impacts. This paper examines the labor effects of policy change in home health care. Major federal home care policy trends since 1980 have spurred the evolution of the typical home care provider toward greater organizational and market rationality. Greater managerial sophistication has introduced changes in management/labor relations. Survey data from the 1986 DRG Impact Study are used to show how the pressure of cost-containment policies has pushed agencies to cut labor costs by increasing workloads, managerial supervision, and control of the work process. Research on the effects of recent policy change in health care has to date focused primarily on potential client effects. Labor impacts are rarely examined and are poorly understood at the time that policy is made. Findings in this article suggest that these issues deserve greater, more systematic attention, because unanticipated labor impacts may prove to be significant impediments to the realization of intended policy goals.     

Freestanding emergency centers: regulation and reimbursement

The freestanding emergency center, which combines the functions of a doctor's office and a hospital emergency room, has emerged as a new provider of health care. These centers have generated considerable controversy over their role in the health care market. Proponents argue that freestanding emergency centers reduce costs by providing care in a more efficient manner and cause other health care providers such as hospital emergency rooms to reduce costs and improve service. Opponents argue that the centers create an additional layer of health care which duplicates existing services and increases total health care costs. This Note examines the controversial issues of licensure, regulation and reimbursement. The Note concludes that freestanding emergency centers can help to reduce health care costs and discusses the steps that should be taken to aid centers in achieving this goal. reduce health care costs and discusses the steps that should be taken to     

Regulation for the enforcement of federal health care provider conscience protection laws. Final rule

The Department of Health and Human Services issues this final rule which provides that enforcement of the federal statutory health care provider conscience protections will be handled by the Department's Office for Civil Rights, in conjunction with the Department's funding components. This Final Rule rescinds, in part, and revises, the December 19, 2008 Final Rule entitled "Ensuring That Department of Health and Human Services Funds Do Not Support Coercive or Discriminatory Policies or Practices in Violation of Federal Law" (the "2008 Final Rule"). Neither the 2008 final rule, nor this final rule, alters the statutory protections for individuals and health care entities under the federal health care provider conscience protection statutes, including the Church Amendments, Section 245 of the Public Health Service Act, and the Weldon Amendment. These federal statutory health care provider conscience protections remain in effect.     

Purchasing power: business and health policy change in Massachusetts

As in many states around the country, health care costs in Massachusetts had risen to an unprecedented proportion of the state budget by the early 1980s. State health policymakers realized that dramatic changes were needed in the political process to break provider control over health policy decisions. This paper presents a case study of policy change in Massachusetts between 1982 and 1988. State officials formulated a strategy to mobilize corporate interests, which were already awakening to the problems of high health care costs, as a countervailing power to the political monopoly of provider interests. Once mobilized, business interests became organized politically and even became dominant at times, controlling both the policy agenda and its process. Ultimately, business came to be viewed as a permanent part of the coalitions and commissions that helped formulate state health policy. Although initially allied with provider interests, business eventually forged a stronger alliance with the state, an alliance that has the potential to force structural change in health care politics in Massachusetts for years to come. The paper raises questions about the consequences of such alliances between public and private power for both the content and the process of health policymaking at the state level.     

Strategies to enhance price and quality competition in health care: lessons learned from tracking local markets

Drawing on observations from tracking changes in local health care markets over the past ten years, this article critiques two Federal Trade Commission and Department of Justice recommendations to enhance price and quality competition. First, we take issue with the notion that consumers, acting independently, will drive greater competition in health care markets. Rather we suggest an important role remains for trusted agents who can analyze inherently complex price and quality information and negotiate on consumers' behalf. With aggregated information identifying providers who deliver cost-effective care, consumers would be better positioned to respond to financial incentives about where to seek care and thereby drive more meaningful competition among providers to reduce costs and improve quality. Second, we take issue with the FTC/DOJ recommendation to provide more direct subsidies to prevent distortions in competition. In the current political environment, it is not practical to provide direct subsidies for all of the unfunded care that exists in health care markets today; instead, some interference with competition may be necessary to protect cross subsidies. Barriers can be reduced, though, by revising pricing policies that have resulted in marked disparities in the relative profitability of different services.     

Preferred providers and the credible commitment problem in health insurance: first experiences with the implementation of managed competition in the Dutch health care system

We investigate the impact of the transition towards managed competition in the Dutch health care system on health insurers' contracting behaviour. Specifically, we examine whether insurers have been able to take up their role as prudent buyers of care and examine consumers' attitudes towards insurers' new role. Health insurers' contracting behaviour is investigated by an extensive analysis of available information on purchasing practices by health insurers and by interviews with directors of health care purchasing of the four major health insurers, accounting for 90% of the market. Consumer attitudes towards insurers' new role are investigated by surveys among a representative sample of enrollees over the period 2005-2009. During the first four years of the reform, health insurers were very reluctant to engage in selective contracting and preferred to use 'soft' positive incentives to encourage preferred provider choice rather than engaging in restrictive managed care activities. Consumer attitudes towards channelling vary considerably by type of provider but generally became more negative in the first two years after the reform. Insurers' reluctance to use selective contracting can be at least partly explained by the presence of a credible-commitment problem. Consumers do not trust that insurers with restrictive networks are committed to provide good quality care. The credible-commitment problem seems to be particularly relevant to the Netherlands, since Dutch enrollees are not used to restrictions on provider choice. Since consumers are quite sensitive to differences in provider quality, more reliable information about provider quality is required to reduce the credible-commitment problem.     

Beyond competition: the normative implications of consumer-driven health plans

The Federal Trade Commission/Department of Justice 2004 report Improving Health Care: A Dose of Competition appeals to efficiency arguments in promoting a wide range of health care market reforms. But the market-based reforms discussed in Improving Health Care are not simply neutral with regard to equity in access to services; they are likely to have substantial and inequitable distributional effects. We use the case of consumer-driven health plans (CDHPs), the pillar of the Bush administration's private-sector health reform efforts, to illustrate the limitations of viewing health policy reform through the lens of Improving Health Care. We conclude that the speculative efficiency gains from CDHPs need to be balanced against well-documented equity concerns within a normative framework. Moreover, other important ethical issues arise with regard to the risks imposed on the population by the introduction of policies that are based on a faith in markets rather than empirical evidence.     

Competitive pricing and the challenge of cost control in medicare

The Medicare program faces a serious challenge: it must find ways to control costs but must do so through a system of congressional oversight that necessarily limits its choices. We look at one approach to prudent purchasing - competitive pricing - that Medicare has attempted many times and in various ways since the beginning of the program, and in all but one case unsuccessfully due to the politics of provider opposition working through Congress and the courts. We look at some related efforts to change Medicare pricing to explore when the program has been successful in making dramatic changes in how it pays for health care. A set of recommendations emerges for ways to respond to the impediments of law and politics that have obstructed change to more efficient payment methods. Except in unusual cases, competitive pricing threatens too many stakeholders in too many ways for key political actors to support it. But an unusual case may arise in the coming Medicare fiscal crisis, a crisis related in part to the prices Medicare pays. At that point, competitive pricing may look less like a problem and more like a solution coming at a time when the system badly needs one.     

Physician participation in Medicaid: background and issues

Most Americans gain entry into the medical care system through office-based primary care physicians. The Medicaid program was created in 1965 in part to increase the access of low-income people to medical services in that mainstream. But, over the years, office-based physicians have reduced their treatment of Medicaid patients, and many have withdrawn from the program altogether. The result is not only that the original programmatic goal has not been fully achieved, but also that the costs of the program are higher than they would be otherwise. In this article, the importance of Medicaid participation by office-based primary care physicians is described, and a number of obstacles to their participation are identified. The obstacles include state policies regarding eligibility, coverage, and provider compensation. The article recommends actions pertaining to these policies that might increase participation.     

Health care in Canada: patterns of funding and regulation

During the 1970s the share of health care expenditure in Canadian GNP remained roughly stable, in the range of 7-71/2 percent of GNP, in marked contrast to its escalation in most other countries (the U.S. in particular) and to previous Canadian experience. The shift to a stable pattern coincided with the completion of the Canadian system of universal comprehensive public hospital and medical care insurance. This paper explores how and why the public insurance system served to contain cost escalation. It then discusses the inadequacy of expenditure experience per se as a basis for health system evaluation--the same data will support claims of both "underfunding" and "spiralling costs." More serious questions involve the influence of alternative patterns of health care funding and delivery on the effectiveness and efficiency of care provision, and the resulting distributional patterns of care and income. A brief sketch is given of the present situation and future possibilities of Canadian health care under these heads.