Wednesday, September 05, 2012

More on Competition 

The subject of economic competition among the providers of health care apparently remains too delicate for anyone – even right-wing Republicans - to take on directly. 

The Op-Ed page of the September 4 issue of the Omaha World-Herald carried a column by Bill Keller of the New York Times commenting on the predicament of Democratic Congressman Ron Wyden (Oregon) who co-sponsored what is now known as the Paul Ryan budget proposals.  Those proposals include an option in Medicare that would allow beneficiaries to decline traditional benefits in favor of a voucher to be applied to health insurance purchased in the private market. 

Midway in the piece, Keller says that “By introducing a measure of choice and competition, Wyden hoped to prod health care providers toward more efficient practices….” 

Missing from all this is a description of just how the Medicare voucher would cause providers to become more efficient while preserving choice. 

The only kind of economically effective competition in health care that I have been able to imagine is one in which patients gravitate to providers that offer the highest quality of care at the lowest cost.  Patients conceivably could do that themselves as individuals, but under the Medicare voucher proposal they would have to do it through an insurance company.  The obvious way for the insurance company to do it is by contracting with the best providers and not with the others.  But that limits choice. 

Maybe some day the advocates of Medicare vouchers will explain how all that would work, but they haven’t done so yet. 

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