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From the Editor |
Business & Government: Striking New Balances
The dynamic mix between private entrepreneurship and government action forms the complex framework of American health care. While many businesses are clear on their commercial goals—expanding or in a few cases reducing market share to earn a profit—when these goals are intertwined with the conflicting priorities of public policy making—providing greater access to care while constraining cost growth—the equation becomes far more complex. We believe that these intersections deserve far greater attention if policymakers are going to successfully craft a health care system for the twenty-first century. The ascendancy of the private-public relationship in health care was embraced by Congress when it enacted Medicare and Medicaid in 1965. While there have been many fits and starts along the way, the United States will never turn away from this private-public model because it’s embedded in the culture. The battle against terrorism only accentuates this imperative.
Businesses provide much of the innovation that makes change the constant, if not always the correct, course in health care. Government provides ballast and always more regulation than entrepreneurs would prefer. On occasion, the government also innovates, as it did when the Nixon administration granted monies that launched a national network of health maintenance organizations (HMOs). Within a decade most large HMOs had become publicly traded companies, the most successful of which consolidated into large corporations. This trend has alarmed the American Medical Association (AMA), which strongly opposed Nixon’s original move, because a large number of insurance markets have become "highly concentrated," according to the AMA, which used as its measure standards developed by the Justice Department and the Federal Trade Commission. Their standards notwithstanding, these agencies have not sought to prevent or impede the rush to consolidate the insurance industry.
In this thematic issue we are publishing a set of papers on the business of health. This effort was supported by the California HealthCare Foundation (CHCF), which, among philanthropies, has been energetic in the pursuit of these issues. As Mark D. Smith, the foundation’s chief executive officer, has said: "The business practices of many provider organizations were developed in a far less competitive environment. Changes in the financing and delivery of health care have created a need to better understand how health care markets work, where and why they don’t work, and the appropriate role of regulation to promote improvements that will benefit consumers and patients."
Debra Draper and colleagues at the Center for Studying Health System Change open the journal with an analysis of how health plans, responding to the managed care backlash, have introduced less restrictive managed care products. One consequence of this trend is an erosion of the ability of health plans to control costs. Katie Levit and colleagues at the Centers for Medicare and Medicaid Services report on how this trend, combined with an increase in economywide inflation and other growth factors, led to a rise in health spending in 2000. One critical dimension of the changing face of health plan care is the shaky relationship between Medicare and managed care. In our latest Web exclusive, posted November 28 (<www.healthaffairs.org>), Robert Berenson proposes that Congress should redesign how Medicare pays health plans.
Other papers on the "business of health" cover the resurgence of many Blue Cross and Blue Shield plans, the turbulent times of Kaiser Permanente as covered by Jeff Goldsmith in a conversation with its chief executive officer, the emergence of defined-contribution health insurance products, the challenges facing employer-sponsored insurance, and the evolution of a business coalition in Minnesota’s Twin Cities. The financial plight of many not-for-profit hospitals in California and New York at a time when the for-profit hospital sector is a Wall Street darling is explored in several papers.
We also devote considerable space to an emerging dialogue over a long dormant health policy issue: whether the United States has an adequate supply of physicians. Finally, we want to alert all of our readers to the unveiling of our redesigned Web site in January 2002, including a twenty-year archive.
Founding Editor
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