Managed competition: maintaining health care within the private sector.

The health care reform debate has been effective in bringing visibility nor only to cost containment issues, but to the need for expanded access to health care. The reform strategies that are currently under consideration are incremental changes that build on the transition in health care that has been underway for more than a decade. A hallmark of that transition is managed care arrangements, such as capitation (which involves a set fee per patient) and other alternative reimbursement methods, which now have become pan of the norm (Miller & Luft, 1991). These arrangements are part of a larger strategy, managed competition, the details of which are under debate for expanding access to care and containing costs. Health economics literature is replete with examples showing that health care cannot be competitive in a strictly free market (Enthoven, 1988; Fuchs, 1988). Strategies within the general framework of managed competition attempt [0 correct failures that occur in applying the free-market system to health care. Managed competition seeks to maintain health care delivery and financing within the private sector, albeit with some degree of government regulation. Advocates of managed competition do not seek to establish a governmental, single-payer system and are wary that government control would result in inefficiency, would be more costly than necessary, and would deter technological advances and improvements in the delivery of care (Enthoven, 1988). Beyond this broad concept, managed competition can incorporate many strategies, laws, and regulations that affect the free-market functioning in health care. This article will review the most common managed competition strategies that are either under debate or being tried and will discuss how they are applied to contain costs, expand access, and maintain health care within the private sector. Each of these strateDonalda Ellek