Estimating health expenditure growth under managed competition. Science, simulations, and scenarios

Abstract

The estimated impact of health system reform proposals on health expenditures influences the health system reform debate. Health expenditure growth rate (HEGR) estimates are particularly critical because small differences in rates over time create large differences in health expenditures. There currently is no hard scientific basis for estimating the impact of managed care/managed competition legislation and market developments on the HEGR. For the 1994 health system reform debate, the two leading nonpartisan modelers developed qualitative scenarios about future health system developments in which managed care/managed competition would have little or no impact on the HEGR. We conclude that there are alternative plausible scenarios, based on current health system changes interacting with potential legislation, in which managed care/managed competition will substantially lower the HEGR. We recommend that simulation models should provide a range of estimates that better reflect both market trends and the profound uncertainty about the effects of health system reform.