Thursday, December 08, 2011
Effective Competition
I have long believed that the best way, perhaps the only
way, to get health care providers to become serious about cost control was to
create competition that caused them to fear losing patients unless they did so.
I have also believed that because the economics of health
care are unique, the forms taken by the competition would also have to be
unique.
Well, we now apparently have an example.
Health insurance companies in Massachusetts have created policies that
they call “tiered.” Subscribers still
have free choice of hospitals, but if they go to ones that have high cost, the
deductible will be higher. The range is
something like a $150 deductible for a low-cost hospital and $1,500 for a
high-cost alternative.
It seems to be having an effect.
The December 7 issue of the Boston Globe has a front page
story about a cost reduction effort at Brigham and Women’s hospital – which is
in the high-cost category. Concern about
the implications of the new “tiered” insurance plans was mentioned in the
article, as was the Brigham’s experience last year of having Harvard Vanguard,
the state’s largest medical group, shift a portion of its admissions to the
nearby Beth Israel Hospital
where costs were lower.
It all reminds me of the quotation that is taken from
Abraham Lincoln’s second address to Congress and provides the title for this
blog:
“As our case is new,
so we must think anew, and act anew. We must disenthrall ourselves, and then we
shall save our country.”