We focus on a number of topic areas identified by state health policy leaders as important to population health.
Keep up with news and updates from the Milbank Memorial Fund. Get the latest from thought leaders, including Christopher F. Koller, president of the Fund.
We publish The Milbank Quarterly, as well as reports, issues briefs, and case studies on topics important to population health.
The Center for Evidence-based Policy at Oregon Health & Science University is a national leader in evidence-based decision making and policy design.
The Milbank Memorial Fund is an endowed operating foundation that publishes The Milbank Quarterly, commissions projects, and convenes state health policy decision makers on issues they identify as important to population health.
December 2009 (Volume 87)
December 2009 | Thomas C. Buchmueller
Context: For many years, leading health care reform proposals have been based on market-oriented strategies. In the 1990s, a number of reform proposals were built around the concept of “managed competition,” but more recently, “consumer-directed health care” models have received attention. Although price-conscious consumer demand plays a critical role in both the managed competition and consumer-directed health care models, the two strategies are based on different visions of the health care marketplace and the best way to use market forces to achieve greater systemwide efficiencies.
Methods: This article reviews the research literature that tests the main hypotheses concerning the two policy strategies.
Findings: Numerous studies provide consistent evidence that consumers’ health plan choices are sensitive to out-of-pocket premiums. The elasticity of demand appears to vary with consumers’ health risk, with younger, healthier individuals being more price sensitive. This heterogeneity increases the potential for adverse selection. Biased risk selection also is a concern when the menu of health plan options includes consumer-directed health plans. Several studies confirm that such plans tend to attract healthier enrollees. A smaller number of studies test the main hypothesis regarding consumer-directed health plans, which is that they result in lower medical spending than do more generous plans. These studies find little support for this claim.
Conclusions: The experiences of employers that have adopted key elements of managed competition are generally consistent with the key hypotheses underlying that strategy. Research in this area, however, has focused on only a narrow range of questions. Because consumer-directed health care is such a recent phenomenon, research on this strategy is even more limited. Additional studies on both topics would be valuable.
Author(s): Thomas C. Buchmueller
Keywords: health insurance; managed competition; consumer-directed; incentives
Read on Wiley Online Library
Read on JSTOR
Volume 87, Issue 4 (pages 820–841)
Published in 2009
Aging in America in the Twenty-first Century: Demographic Forecasts From the MacArthur Foundation Research Network on an Aging Society
Expensive Cancer Drugs: A Comparison Between the United States and the United Kingdom
Get the Latest from the Milbank Memorial Fund