Health Care Anew

Although we are not yet ready as a people openly to accept that market forces can have an important and productive role to play in health care reform, we continue to tinker with the possibility. 

The Money (i.e., business) section of the November 19 issue of the Omaha World Herald carried an Associated Press article about companies that are switching their health plans from defined benefit to defined contribution.  Traditionally, employers have selected for their employees a health insurance plan offering specific benefits and paid all or a predetermined portion of the cost.  Under defined contribution, the employer provides the employee with a certain amount of money, which the employee can use to pay for a plan of his or her choosing. 

In some cases, the employee must choose from a list of plans created by the employer.  In others, the employee can pick a plan from the list offered by “exchanges;” i.e., lists of plans offered by insurers and benefit companies. 

The consequence is that insurance companies will have to compete for individual patients rather than for corporate accounts.  Those who favor this approach would argue that patients spending their own money will be more discriminating in the market than companies that may be more concerned with providing a benefit that their staffs find attractive.   

There may be something to that, but the real potential of market forces will not be seen until they are applied to the health care delivery system itself; i.e., when hospitals and other providers have to compete for patients on the basis of cost, quality and patient satisfaction.  The market described in the World Herald article doesn’t really do that, since it relates only to health insurance, which in most cases continues to pay whatever provider the patient chooses. 

But it is a start.