Managed competition in the United States: How well is it promoting equity and efficiency?

Abstract

Managed competition frameworks aim to control healthcare costs and promote access to high-quality health insurance and services through a combination of public policies and market forces. In the United States, managed competition delivery systems are varied and diffused across a patchwork of divided markets and populations. This, coupled with extremely high national health spending per capita, makes a more unified managed competition strategy an appealing alternative to a currently struggling healthcare system. We examine the relative effectiveness of three existing programmes in the U.S. that each rely upon some principles of managed competition: health insurance exchanges instituted by the Affordable Care Act, Medicaid managed care organisations, and Medicare Advantage plans. Although each programme leverages some competitive features, each faces significant hurdles as a candidate for expansion. We highlight these challenges with a survey of academic health economists, and find that provider and insurer consolidation, highly segmented markets, and failing to incentivise competitive efficiencies all dampen the success of existing programmes. Although managed competition for all is a potentially desirable framework for future health reform in the U.S., successful expansion relies on addressing fundamental issues revealed by imperfect existing programmes.