Enabling a competitive environment for provision of health services in order to improve quality and encourage efficiency.
Government financing of basic and essential public health measures leaves the remaining clinical services to be financed privately or by social insurance. Governments can promote diversity and competition in provision of private sector health services by adopting policies that: (a) encourage social or private insurance (with regulatory incentives for equitable access and cost containment) for clinical services outside the essential package; (b) encourage suppliers (both public and private) to compete both to deliver clinical services and other health resources, such as drugs, not protecting domestic suppliers from international competition; and (c) generate and disseminate information on provider performance, on essential equipment and drugs, on the costs and effectiveness of interventions, and on the accreditation status of institutions and providers. These measures would improve quality and drive down costs.
"Managed competition" is a health insurance scheme in the USA. It pursues the three objectives of cost-effective health spending, universal insurance coverage, and cost containment simultaneously though tightly regulated competition among companies that provide a specified package of health care for a fixed annual fee.
Argentina is endeavouring to reform its monolithic social security system, discredited because of past inefficiencies and corruption, by seeking the objectives of competition and accountability. Even when there is little or no direct competition among health insurance funds, as in Japan and Korea, multiple semi-independent insurance institutions may still have advantages over a single large parastatal agency.
Local insurance insurance funds managed by boards composed of representatives of workers, employers and local government, as in Germany, tend to be more accountable to their members.
Where social insurance covers services by government hospitals, competition with the private sector can improve performance. Other approaches are to allow government hospitals to compete with one another as semi-autonomous enterprises, as in the UK in recent years, and to give hospital managers financial and career incentives to meet performance targets, as in Chile.
Privatization and competition in the provision of medical services encourages medical malpractice and financial fraud. Without effective public regulation, medical standards are liable to fall.