Jerusalem International Conference

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Jerusalem International Conference

• Health System Reforms a perpetual
  emotion
• 12 December 2006
• Wynand P.M.M. van de Ven
• Professor of Health Insurance
• Department of Health Policy and Management
• Erasmus University Rotterdam

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Agenda

• Erosion of subsidizing solidarity
• Managed Competition elegant in theory, but
  complex in practice!
• Two tier system?
• Conclusions.

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1. Erosion of subsidizing solidarity

• Increase of lifestyle-related health problems and
  a decrease of the proportion of health expenses
  due to bad luck
• A growing divergence of consumers willingness to
  cross-subsidize certain types of health care
• An increase of so-called flat-of-the-curve
  medicine.

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Choices and health system reform

• Erosion of subsidizing solidarity
• Increase of health care spending due to medical
  technology and ageing
• ? This tension increases the need to make
  choices about priorities in health care. These
  choices and health system reform should be
  interrelated.

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Monetary incentive for efficiency

• If patients, for whatever reasons, prefer
  inefficient providers to efficient providers of
  care, and if money follows the patient, both
  the patients and the money will go to inefficient
  providers.
• So it makes sense to give the consumer,
  analogously to the natural incentive to go to
  responsive providers, a monetary incentive to go
  to efficient providers.

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Managed Competition

• Competition among health insurers
• consumers have a periodic choice among health
  insurers or health plans (organizations in
  which insurer and providers are integrated)
• Competition among providers of care
• insurers selectively contract with providers
• Not a free market.

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MC elegant in theory

• The Managed Competition model allows the
  consumers to make a choice among insurance
  policies based on premium and quality, with the
  cross-subsidies being unrelated to this consumer
  choice. For example
• a Standard-policy with good care and a good
  premium,
• a Golden-policy with excellent care and a high
  premium.

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Standard-policy versus Golden-policy

• Standard-policy covers e.g.
• Diagnosis with 99 certainty, costs 100
• Predominantly generic drugs
• No cholesterol-reducing tablets if stopping with
  smoking has the same effect
• Good plastic hip.
• Golden-policy covers e.g.
• Diagnosis with 99.9 certainty, costs 10,000
• All drugs
• Excellent golden hip.

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MC complex in practice

• Although elegant in theory, the implementation of
  the Managed Competition model in practice appears
  to be complex because it is hard to fulfill the
  necessary preconditions.

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Two tier system?

• First-class second-class health care?
• Not as on cruise ships like the Titanic
• 60 of 1-class passengers survived
• 26 of 3-class passengers survived
• Yes, like in airplanes and trains
• the same safety.

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Standard-policy versus Golden-policy

• New safety technologies in cars must first
  successfully stand the test of the market do
  high income people consider it cost-worthy?
• Over time successful technologies become
  better/cheaper available in Volkswagen.
• What about new health technologies?
• Look at the lowest income group (Standard-policy
  OK?) and not at the happy few.

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Health reform a perpetual emotion

• Health system reforms will have to deal with both
  the erosion of subsidizing solidarity and the
  increasing health care expenses in a way that is
  acceptable for society.
• Health system reform is not going to fade away
  it is a perpetual emotion rather than a remnant
  of a previous era.