Advocates for Evidence-Based Health Policy Speakers
Unhealthy Competition
Competition among health plans is supposed to yield benefits for “consumers.” However, health care is not a true market. In certain situations, increased choice can lead to detrimental effects on patients.
Market-oriented thinkers believe that greater choice on the part of patients will lead to benefits in either quality, cost, or both. A recent study explores this question among Medicaid patients in California. With costs relatively controlled, researchers could focus on the quality of care delivered to this population.
Twenty-one of California’s counties (accounting for 90 percent of all state Medicaid beneficiaries) participated in the study. While all beneficiaries were a part of managed care, in some counties the patients had a choice of health plans (13) whereas in others (8) there was no choice. Counties with choice typically had a commercial plan competing with a state-run plan; two counties had competition among multiple commercial plans.
The two outcomes of interest were the duration of health plan enrollment and the percentage of ambulatory care sensitive hospital admissions (a proxy for the quality of outpatient primary care). Data were derived from a 2002 Medicaid Eligibility File linked to hospital discharge data. The sample consisted of 2.1 million individuals continuously enrolled in Medicaid during 2002; 1.9 million lived in a county with a choice among health plans.
A mere 2.5 percent of eligible enrollees made a switch in their health care plan during the year. Compared to enrollees without a choice, enrollees living in counties with a choice of health plans were significantly less likely to have 12 months of continuous coverage (79.2 percent versus 95.2 percent, p<0.001). In fact, even the best performing county of those with a choice of health plans performed worse than the worst county without health plan choice (85.6 percent versus 89.5 percent, p<0.001).
Greater than ninety-five percent of enrollees in counties with zero choice were assigned a health plan within the first month. By comparison, among enrollees in counties with choice, fewer than 1 percent of beneficiaries were assigned to a health plan during the first month and nearly half remained without a health plan after three months.
Not surprisingly then, ambulatory care sensitive conditions were significantly more likely to occur in Medicaid enrollees in counties with plan choice (6.58 versus 6.27 admissions per 1000 enrollees). For appendicitis, a medical condition not sensitive to the quality of outpatient primary care, admission rates were roughly identical (1.02 versus 1.01 admissions per 1000 enrollees).
The authors went on to find a dose-response relationship between the duration of continuous health plan coverage and ambulatory care sensitive admission rates. Patients with less than 3 months of continuous coverage had over twice the rate of these unnecessary admissions compared to patients with 12 months of continuous coverage (6.01 versus 13.45 per 1000).
Commentary
Many countries have bought into the philosophy of “managed competition.” Championed by Alain Enthoven, implemented by , and recently adopted (albeit in part) by the Obama Administration, such competition may not be all that it is advertised to be.
While managed competition is probably better than unregulated competition within an imperfect healthcare marketplace, this study shows that, at least for the Medicaid population, competition and plan choice appears detrimental to one’s health. The obvious explanation is that beneficiaries with choice procrastinate too long when choosing health plans. When outside the health system, beneficiaries are unable to get appropriate medication or doctor advice. Therefore, it is no surprise that instead of dealing with health issues in the doctor’s office, these patients wind up in the hospital receiving far more expensive medical care.
These findings may be generalizable to Medicaid populations in other states. Common sense would suggest that a default choice be made for all enrollees where competition exists to eliminate lapses in coverage.
While the findings of this study cannot be generalized to the portion of the population with privately purchased insurance, regulators crafting “health insurance exchanges” in the coming years should remain alert to the lessons learned to avoid similar problems.
by
Cedric K. Dark, MD, MPH