I’m just going to shift and briefly comment on the way in which policy proposals are addressing the issues that we’ve heard discussed this morning, looking first at discussions of competition and Medicare restructuring, and second at expansion or changes in the Medicare benefit, particularly prescription drugs. A lot of the discussion of restructuring Medicare focuses on the “magic” of managed ...

To understand “managed care,” one needs to understand the traditional model of health care organization and finance that managed care was intended to replace. That model was aptly characterized “Guild Free Choice” by Charles Weller to indicate that “free choice” was being used as a restraint of trade to block the emergence of any form of economic competition among doctors (Weller 1983). Its pri...

We study the consequences of hospital competition for Medicare beneficiaries’ heart attack care from 1985 to 1994. We examine how relatively exogenous determinants of hospital choice such as travel distances influence the competitiveness of hospital markets, and how hospital competition interacts with the influence of managed-care organizations to affect the key determinants of social welfare—e...

This paper describes the early experience of the Health Insurance Plan of California (the HIPC), a small-employer purchasing cooperative established in 1993. The plan's experience is consistent with the predictions of advocates of market-oriented health care reform: The program's design has encouraged cost-conscious choice by enrollees, which in turn has generated price competition among plans....

Medicare+Choice (M+C) was conceived to bring managed care and competitive forces to bear on Medicare. Ultimately, M+C could not thrive under the conditions of the marketplace and the Balanced Budget Act of 1997. Here I review what went wrong and the lessons from the experience, concluding that M+C is a tool, not a strategy. While managed care in a multiple-choice environment may have the potent...