The Value of Innovation in Health Care

Executive Summary

During much of this decade, the climate in the health sector has been largely favorable to market-based policies, supporting innovation, competition, market pricing, and consumer choice.

But the United States is at a crossroads in the policy debate where most of the proposals being offered by political leaders in Washington would exert much more government control over our health sector, forcing the private health sector to operate under the same rule-driven, price-fixed, benefit-restricted dictates as the public sector.

Before we embark on this course, it would be wise to review what innovation has brought us and to assess whether we are ready to cast it aside to put much more control in the hands of government.

Market-friendly changes in public policy and countless innovations from the private sector have helped to moderate the rise in health insurance cost, create new models for care delivery and financing, and support the movement toward patient-centered health care.

Health Savings Accounts and the competitive Medicare drug benefit are the changes that made the headlines during the Bush administration, but innovations in care delivery, creative benefit offerings by health plans and employers, reduced prescription drug spending, and innovations in other public programs are all part of the story.

These changes have helped to keep the increase in U.S. health spending at 6.1 percent in 2007. Employers who were early adopters of consumer-directed plans have seen their premiums increase at an even lower rate of 2.6 percent.

While many problems await the Obama administration and many changes still must be made in public policy, it is vital to respect the genius of a market in responding to the demands of consumers for better quality care at more affordable prices through efficiency and innovation.

As the decade of 2000 proves, competition works, even in health care.

 

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Executive Summary

During much of this decade, the climate in the health sector has been largely favorable to market-based policies, supporting innovation, competition, market pricing, and consumer choice.

But the United States is at a crossroads in the policy debate where most of the proposals being offered by political leaders in Washington would exert much more government control over our health sector, forcing the private health sector to operate under the same rule-driven, price-fixed, benefit-restricted dictates as the public sector.

Before we embark on this course, it would be wise to review what innovation has brought us and to assess whether we are ready to cast it aside to put much more control in the hands of government.

Market-friendly changes in public policy and countless innovations from the private sector have helped to moderate the rise in health insurance cost, create new models for care delivery and financing, and support the movement toward patient-centered health care.

Health Savings Accounts and the competitive Medicare drug benefit are the changes that made the headlines during the Bush administration, but innovations in care delivery, creative benefit offerings by health plans and employers, reduced prescription drug spending, and innovations in other public programs are all part of the story.

These changes have helped to keep the increase in U.S. health spending at 6.1 percent in 2007. Employers who were early adopters of consumer-directed plans have seen their premiums increase at an even lower rate of 2.6 percent.

While many problems await the Obama administration and many changes still must be made in public policy, it is vital to respect the genius of a market in responding to the demands of consumers for better quality care at more affordable prices through efficiency and innovation.

As the decade of 2000 proves, competition works, even in health care.

 

SHARE THIS ARTICLE

About the author