• Health plan competition improves quality, right? Right??? – ctd.

    Yesterday, Austin highlighted a paper that said competition might not increase quality. Here’s another paper that goes even further. “Quality and Equity of Care in the Veterans Affairs Health-Care System and in Medicare Advantage Health Plans“:

    Background: After an organizational transformation in the mid-1990s, the quality of care in the Veterans Affairs health-care system(VA) compared favorably with the quality of care in some private sector settings. Whether this performance advantage has persisted, and also its relation to geographic and socioeconomic variations in care, is unknown.

    Objective: We compared the quality and equity of care for older adults in the VA with that delivered in Medicare Advantage (MA) health plans using the same performance measures.

    Research Design: Cross-sectional comparison.

    Subjects: A total of 293,554 observations from enrollees in 142 VA medical centers (VAMCs) and 5,768,573 observations from enrollees in 305 MA plans.

    Measurements: Adherence to quality measures assessing diabetes, cardiovascular, and cancer screening care from 2000 to 2007.

    Using the same HEDIS type measures Austin described yesterday, this study compared the quality of the VA health care system to that of private Medicare Advantage. Remember, the VA isn’t just a single-payer system, a la Canada or Medicare, it’s a completely government run health care system a la the UK. Can you guess where this is headed?

    Results: The VA outperformed MA plans on 10 of 11 quality measures in the initial study year, and on all 12 measures in the final year. In 2006 and 2007, adjusted differences between the VA and MA ranged from 4.3 percentage points (95% CI, 3.2-5.4) for cholesterol testing in coronary heart disease to 30.8 percentage points (95% CI, 28.1-33.5) for colorectal cancer screening. For 9 of 12 measures, socioeconomic disparities (defined as the difference in performance rates between persons in the highest and lowest quartiles of area-level income and education) were lower in the VA than in MA. Across all measures, the mean interquartile range of performance was 6.7 percentage points for VAMCs and 14.5 percentage points for MA plans.

    For people over the age of 65, the VA outperformed private insurance (Medicare Advantage) on nearly all the measures of quality. The care it delivered was also more consistent across geography and socioeconomic status.

    I know a lot of you believe that private market and competition are the cures for what ails us. Unfortunately, there’s just not a lot of evidence that’s true.


    • This is certainly interesting and the paper deserves consideration. But what about the slew of recent papers from Zack Cooper, Carol Propper, Nick Bloom et. al. that show that competition between hospitals in the UK actually does improve quality? I would say that is pretty solid evidence that competition improves quality at least in some regards.

    • That’s the important question, when to infuse market principles into health care. These data are intriguing.
      Recent data we reviewed on our site suggests hospitals perform better on quality and lower prices when competing however. http://www.policyprescriptions.org/hospital-consolidation-leads-to-higher-prices/
      So the next question is, should we have private hospitals and public insurance?

    • Does struggling to work withing the highly regulated confines of today’s health insurance “market” count as ‘competition’ and could it be considered ‘the private market’ ?

      You say “Unfortunately, there’s just not a lot of evidence that’s true.”, but I would suggest that there’s not a lot of evidence that it is not true, or that anything like ‘the private market’ or competition has been attempted in our modern US health arena. How reliable are any price signals, for instance?

      • “How reliable are any price signals, for instance?”

        I’m sure I can find a study to support this statement: Most Americans believe that the more expensive the care, the higher the quality.

    • 1. Competition between providers is not the same as competition between health plans. Providers have more incentives to compete on quality than plans do, as other recent TIE posts explain. Plans are exceptionally fearful of adverse selection (I have some inside knowledge about this) and are far more likely to advertise provider access and plan likability than “quality.”

      2. This isn’t going to change while “consumers” (i.e., patients) believe quality is represented by provider choice, service convenience, and likability rather than evidence-based treatments and outcomes. Employers tend to focus on price competition, and there’s little if any evidence Medicare beneficiaries choose hospitals based on published quality scores; often their primary MD chooses the hospital for them, based on his/her institutional affiliation.

      3. If Medicare/CMS doesn’t continue to publish process and outcomes quality data for hospitals and other providers, true quality will never gain more influence on patient choice.

      4. Gainsharing based on process/outcomes quality seems far more likely to change provider behavior than consumer perceptions. That ‘credence good’ is one powerful phenomenon.