Health Care Policy and Regulation

259 Pages·1995·11.52 MB·English

by  Thomas A. Abbott III (auth.), Thomas A. Abbott III (eds.)

HEALTH CARE POLICY AND
REGULATION
Topics in Regulatory Economics
and Policy Series
Michael A. Crew, Editor
School of Management-Rutgers University
Newark, New Jersey, U.S.A.
Previously published books in the series:
Rowley, C., R. Tollison, and G. Tullock:
PoliticalEconomyofRen~Seekmg
Frantz, R.:
X-Efficiency: Theory, Evidence and Applications
Crew, M.:
Deregulation and Diversification of Utilities
Shogren, J.:
The Political Economy of Govemment Regulation
Hillman, J., and R. Braeutigam:
Price Level Regulation for Diversified Public Utilities
Einhorn, M.:
Price Caps and Incentive Regulation in Telecommunications
Crew, M.:
Competition and the Regulation of Utilities
Crew, M., and P. Kleindorfer:
Competition and Innovation in Postal Services
Thompson, H.:
Regulatory Finance: Financial Foundations of Rate of Return Regulation
Crew, M.:
Economic Innovations in Public Utility Regulation
Crew, M., and P. Kleindorfer:
The Economics of Postal Service
Crew, M., and P. Kleindorfer:
Regulation and the Nature of Postal and Delivery Services
Oren, S., and S. Steven:
Service Opportunities for Electric Utilities: Creating Differentiated Products
Kolbe, A.L., W.B. Tye, and S.C. Myers:
Regulatory Risk: Economic Principles andApplications to Natrual Gas Pipelines
Pechman, C.:
Regulating Power: The Economics of Electricity in the Information Age
Gordon, R.K.:
Regulation and Economic Analysis: ACritique over Two Centuries
Blackmon, G.:
Incentive Regulation and The Regulation of Incentives
Crew, M.A.:
Incentive Regulation for Public Utilities
HEALT H CARE POLICY AND
REGULATION
edited by
Thomas A. Abbott, 111
Graduate School of Management
Rutgers University
Newark, New Jersey, U.S.A.
Springer Science+Business Media, LLC
ISBN 978-1-4613-5932-6 ISBN 978-1-4615-2219-5 (eBook)
DOI 10.1007/978-1-4615-2219-5
Library of Congress Cataloging-in-Publication Data
A C.I.P. Catalogue record for this book is available from
the Library of Congress.
Copyright<!:> 1995 by Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers in 1995
Softcover reprint ofthe hardcover 1st edition 1995
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or transmitted in any form or by any means, mechanical,
photo-copying, recording, or otherwise, without the prior written permission of
the publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
CONTENTS
Authors and Discussants vii
Preface and Acknowledgements ix
1 Introduction
Thomas A. Abbott, III 1
PART I-HEALTH CARE REFORM 11
2 Lessons from Public Utility Regulation for the 13
Economic Regulation of Health Care Markets: An
Overview
Thomas A. Abbott, III, and Michael A. Crew
Comments 38
Warren Greenberg
Comments 41
Geoffrey Liss
3 Regulatory Strategies Under Managed Competition 45
Health Care Reforms
Mark Schlesinger
Comments 73
John Ciccone
4 Health Care Cost Containment in Connecticut 81
L. Spencer Cain
5 Health Care Reform in New Jersey 93
Pamela S. Dickson
6 Health Security Act: Summary And Impact 97
Ronald Rouse, Philip Vernon, Linda Stackman, and
Keith Servis
v
vi HEALTH CARE POLICY AND REGULAnON
PART II-PRICE REGULATION 103
7 Regulating Pharmaceutical Prices 105
Thomas A. Abbott, III
Comments 135
Alison Keith
8 Hospital Price Regulation: Evidence and Implications 143
for Health Care Reform
Jack Hadley
9 Paying Physicians as Agents: Fee-For-Service, 163
Caption, Or Hybrids?
Mark V. Pauly
Comments 175
Beatrice E. Manning
Comments 177
David W. Lee
PART III-QUALITY REGULATION 181
10 Medical Practice Guidelines and the Efficient 183
Allocation of Resources
John A. Rizzo and Jody L. Sindelar
Comments 200
Kathleen A. Weis
11 Contending Views of Quality Management in Health 205
Care: Implications for Competition and Regulation
David Blumenthal and Richard Bohmer
Comments 222
Malcolm G. Coblentz
Comments 224
Martin Gaynor
12 Measuring and Improving Quality in Health Care 231
Mark R. Chassin
Comments 236
James F. Burgess, Jr.
Comments 240
Paul M. Schyve
Glossary 243
AUTHORS AND DISCUSSANTS
Thomas A. Abbott, HI, Assistant Professor, Rutgers University
Robert Barnett, Assistant Director, Office of Health Systems Management,
Division of Health Care Financing, New York Department of Health
P. George Benson, Dean, Rutgers University
David Blumenthal, MD, Massachusetts General Hospital
Richard Bohmer, MD, Clinical Director of Quality Improvement,
Massachusetts General Hospital
James Burgess, Economist, Department of Veterans Affairs
L. Spencer Cain, Chief Analyst, Connecticut Legislative Program Review and
Investigations Committee
Mark Chassin, MD, Commissioner, New York Department of Health
John Ciccone, MD, President, Health Partnership for Quality Reform
Malcolm Coblentz, MD, St. Barnabas Medical Center
Michael A. Crew, Professor and Chair, Department of Finance-Economics,
Rutgers University
Pamela S. Dickson, Assistant Commissioner, New Jersey Department of Health
Martin Gaynor, Assistant Professor, John Hopkins University
Gerry Goodrich, President and CEO, Irvington General Hospital
Warren Greenberg, Professor, George Washington University
Joseph Guy, Director, Bureau ofMedicaid Management Information Systems,
New York Department of Health
Jack Hadley, Director, Institute for Health Care Research and Policy,
Georgetown University
Michael Hoffman, Director of Research, Commission on Hospitals and Health
Care
Alison Keith, Director, Economic Analysis, Pfizer Pharmaceuticals
vii
viii HEALTH CARE POLICY AND REGULAnON
AI K1evorick, Deputy Dean, Cowles Foundation, Yale University
David Lee, Economist, American Medical Association
Geoffrey P. Liss, Executive Secretary, New Jersey State Department of Health
Beatrice Manning, MD, New Jersey Department of Health
Mark V. Pauly, Professor, University of Pennslyvania
John Rizzo, Assistant Professor of Public Health, Yale University
Mark Schlesinger, Associate Professor for Public Health, Yale University and
Rutgers University
Paul Schyve, MD, Senior Vice President, Joint Commission on Accreditation of
Health Care Organizations
W. Robert Simons, Director, PRACON Consulting Services
Jody Sindelar, Associate Professor, Yale University
Kathleen Weis, Senior Epidemiologist, Agency For Health Care Policy and
Research
PREFACE AND ACKNOWLEDGEMENTS
This book is the result of three one-day Health Care Policy and Regulation
Workshops held at Rutgers-The State University ofNew Jersey during the Spring
of 1994 and sponsored by The Robert Wood Johnson Foundation. These work-
shops brought together over 70 academics, government health care regulators and
administrators, health care providers, and other health industry representatives to
discuss issues involved in health care reform and regulation. Although there were
some disagreements about how best to accomplish it, everyone at the workshops
was interested in putting aside self interest and improving health care delivery in
America. These discussions yielded many new insights into the complex issues
involved in reforming health care delivery and increased everyone's awareness of
the struggles ahead of us. The views expressed in the following chapters and
comments are those of the authors and do not necessarily reflect those of the sponsor
or the author's affiliated institutions.
There are a large number of people who played important roles in putting
together these workshops and this volume. In particular, I would like to thank the
members of the organizing committee, without whom's help the Health Care Policy
and RegulationWorkshop would have remained just an idea in the back ofmy head.
In particular, I would like to thank Joel Cantor of The Robert Wood Johnson
Foundation; Jody Sindelar, Donna Diers, and Bradford Gray of the Department of
Epidemiology and Public Health, Yale University; Robert Barnett ofthe New York
Department of Health; Jack Croweak of Blue Cross-Blue Shield of Connecticut;
Kenneth Raske of the Greater New York Hospital Association; Nancy Wolff of the
Institute for Health, Health Care Policy, and Aging Research at Rutgers University;
and Michael Crew, Director of the Center for Research in Regulated Industries at
Rutgers University.
Many thanks are also owed to the distinguished speakers and discussants who
took part in these workshops. A complete list can be found on pages vii-viii.
Without their efforts and cooperation, neither the workshops nor this book would
have been possible.
I would especially like to thank Michael Crew, Director, Linda Brennan, Admin-
istrative Assistant, and Kathleen Rutledge, Senior Clerk, at the Center for Research
in Regulated Industries. Without the Center's full support, the task organizing the
workshops would have been impossible. Not only did Linda provide excellent
editorial assistance, but she also prepared the final camera-ready manuscript which
ix
x HEALTH CARE POLICY AND REGULAnON
made speedy publication possible. Kathy's expert administrative assistance made
it possible to go from the concept of the workshop to the first meeting in less than
three months. Moreover, it was her oversight that kept the workshops running
smoothly despite the problems of inclement weather and missing speakers. The
usual disclaimers apply, none of the individuals named here is responsible for any
errors. The views expressed are the views of the authors and not of their companies
or affiliations or of the sponsor.
THOMAS A. ABBOTT, III