The health care industry in the United States is exceptional because in spite of so much competition, adding up the wins and losses will get you nothing, which is strange because competition commonly increases value via lesser costs & higher quality as is the case in the used cars Langley market. The insurers have centered on lessening & transferring costs, maximizing their bargaining power & limiting services, as if it was a commodity. They have given broad services without differentiation, basing the competition on handiness & reputation in their market of locality.
Competition is supposed to provide the highest value for patients resulting in further innovation. This will not make insurers look like gods but will focus on practice areas that will cater to particular maladies & conditions with superior quality, less expensive services. Health plans will do away with their restrictions permitting members to select from the marketplace the insurers that present the most excellent value for their condition. It will also help clients decide by counseling them, and giving information that gauge the value being given by insurance providers.
But, sad to say, competition in the US is not like this but the other way around. Yet competition that is based on value is not a theory and, in fact, is occurring. Some insurers are starting to provide unusual services, even building the facilities & groups to supply them. They are also amassing the data to evaluate their performance and make their services better.
Competition is thought of as an amazingly potent force in compelling improvement in quality & lowering of costs. And this has been true in other countries or even the here but in other industries. The United States generates more competition compared to other health care systems the world over yet the paradox is the costs are steep & increasing without provisions of superior quality.
No one disputes that health care spending in the U.S. has been rising dramatically. According to the Centers for Medicare and Medicaid Services (CMS), health care spending is projected to reach $8,160 per person per year by the end of 2009 compared to the $356 per person per year it was in 1970. This increase occurred roughly 2.4% faster than the increase in GDP over the same period. Though GDP varies from year-to-year and is therefore an imperfect way to assess a rise in health care costs in comparison to other expenditures from one year to the next, we can still conclude from this data that over the last 40 years the percentage of our national income (personal, business, and governmental) we’ve spent on health care has been rising.
Despite what most assume, this may or may not be bad. It all depends on two things: the reasons why spending on health care has been increasing relative to our GDP and how much value we’ve been getting for each dollar we spend.
The competition that has been happening is not the right kind. The insurance providers are treating health care as a commodity. They have concentrated in lowering the costs and developing their competitive edge with the achievements of one happening at the expense of others. The focus is on transferring the costs to competitors, captivating clients, growth in size in order to raise bargaining power, limiting options & services, and lastly resorting to legal action.
The consequence of all these is big health plans without differentiations and insurance system that stresses range & size. Efforts to change have been futile, as they didn’t deal with the root of the problem. Focusing particularly on conditions will follow in having a more dedicated team, building up facilities which permit for enhanced effectiveness of specialized care.