“Managed competition” for Ireland? The single versus multiple payer debate

Abstract

BackgroundA persistent feature of international health policy debate is whether a single-payer or multiple-payer system can offer superior performance. In Ireland, a major reform proposal is the introduction of ‘managed competition’ based on the recent reforms in the Netherlands, which would replace many functions of Ireland’s public payer with a system of competing health insurers from 2016. This article debates whether Ireland meets the preconditions for effective managed competition, and whether the government should implement the reform according to its stated timeline. We support our arguments by discussing the functioning of the Dutch and Irish systems.DiscussionAlthough Ireland currently lacks key preconditions for effective implementation, the Dutch experience demonstrates that some of these can be implemented over time, such as a more rigorous risk equalization system. A fundamental problem may be Ireland’s sparse hospital distribution. This may increase the market power of hospitals and weaken insurers’ ability to exclude inefficient or poor quality hospitals from contracts, leading to unwarranted spending growth. To mitigate this, the government proposes to introduce a system of price caps for hospital services.The Dutch system of competition is still in transition and it is premature to judge its success. The new system may have catalyzed increased transparency regarding clinical performance, but outcome measurement remains crude. A multi-payer environment creates some disincentives for quality improvement, one of which is free-riding by insurers on their rivals’ quality investments. If a Dutch insurer invests in improving hospital quality, hospitals will probably offer equivalent quality to consumers enrolled with other insurance companies. This enhances equity, but may weaken incentives for improvement. Consequently the Irish government, rather than insurers, may need to assume responsibility for investing in clinical quality. Plans are in place to assure consumers of free choice of insurer, but a key concern is a potential shortfall of institutional capacity to regulate managed competition.SummaryManaged competition requires a long transition period and the requisite preconditions are not yet in place. The Irish government should refrain from introducing managed competition until sufficient preconditions are in place to allow effective performance.

Will the Economic Recession Inhibit the Out-of-Pocket Payment Willingness for Health Care?

“…To protect the citizens who need medical services, countries have established health insurance systems to address the issue of health risk allocation. All medical systems require anticipated payments, which influences the decisions of citizens on the health-care payment, although medical systems are designed differently around the world [19,20]. As a supplement to the universal health insurance system, many countries rely heavily on patients to have out-of-pocket payment for health care.…”

Optimisation of Healthcare Contracts: Tensions Between Standardisation and Innovation Comment on "Competition in Healthcare: Good, Bad or Ugly?"

“…In multi-payer systems where the effectiveness of risk equalisation is limited, such as in Ireland and Israel, insurers may flourish by risk-selecting profitable patient subpopulations, as noted by Professor Goddard, and this dilutes incentives to craft improved contracts for providers. 8 Risk adjustment is also increasingly used in provider-payer contracts to adjust payment to reflect patients' risk profile. This is important when using capitation or global budget forms of contract, such as the Alternative Quality Contract.…”

“…Authorities in countries such as the Netherlands seek to transition to such an incentive framework, but to our knowledge, no country has demonstrably achieved such incentives. 8 …”

“…The perverse incentives associated with multi-payer systems are well-documented, and a fragmented payer market dilutes the influence of each payer on provider behaviour. 8 Moreover, contractual innovation is not confined to the private sector or to multiple payer systems. The Center for Medicare and Medicaid Innovation in the United States, for instance, is a public sector unit conducting trials in innovative contracting mechanisms.…”

Competition in Healthcare: Good, Bad or Ugly?

“…Some countries (eg, Ireland) may be moving towards multiple payer systems. 5 In low-and middle-income countries (LMIC), the debate on the financing side is centred more around financial protection and in the quest for universal coverage there are many possible configurations that involve competition to one degree or other. 6 The potential benefits of having competing insurers depend on key features of the healthcare market, including the degree to which insurers compete for customers -which in principle may drive down premiums; and also the degree to which they can influence the supply-side of the marketwhich may reduce prices and improve quality if the structure of the market incentivises purchaser pressure on providers.…”