VI. Key Issues: Financing and Delivery >> A. Health Spending >> Health Cost Containment >> Promote Competition
Managed competition is focused on stimulating competition among health plans offering reasonably comprehensive benefits by establishing fair rules of competition and giving consumers strong economic incentives to consider value for money in selecting among plans.
In contrast, consumer-directed health care (CDHC) focuses on stimulating competition among health providers using high deductibles to incent consumers both to consider value for money in selecting health services and to encourage healthier behavior.
Competition to encourage value purchasing by consumers (including under managed competition or CDHC) may be enhanced by greater transparency over a) prices for medical care services or treatments; b) quality of health plans; and c) quality of health providers.
Antitrust enforcement in the markets for insurance and medical services is designed to encourage more competitive pricing than would prevail were greater consolidation permitted.
Business coalitions can promote competition on value for money by educating payers or consumers about smart purchasing, by pooling data to achieve greater transparency, or by using their purchasing leverage directly.
- Catalyst for Payment Reform. From Reference Pricing to Value Pricing. Explains what reference pricing is and how it works. Shows a continuum of reference pricing options available that promote value for the money in health care.
- Goodman, John. Stunning Results from California (8.7.13). Provides concrete graphic illustrations of how reference pricing worked to dramatically lower costs for Calpers.
- Robinson, James C. and Timothy T. Brown. Changes in Patient Volumes, Allowed Charges, Consumer Cost Sharing, and CalPERS Payments for Orthopedic Surgery Associated with Reference Pricing. Berkeley Center for Health Technology. June 2013. Shows that CalPERS saved 19.6% in 2011 and 18.6% in 2012 using reference pricing.