The Backlash Against Managed Health Care: Hard Politics Make Bad Policy

Posted: 8 Oct 2001

Abstract

In this lecture, the author attributes the political backlash against managed care to a health care marketplace in which consumers have virtually no autonomy or sense of participation in choosing a health plan. Because choices are made either by consumers themselves in ignorance concerning the true costs and trade-offs involved or collectively through employment groups, market outcomes -- whatever people find themselves stuck with ex post -- cannot plausibly be said to be validated, even presumptively, because people had a reasonable opportunity to choose ex ante. Lacking the legitimacy that choice, deliberately exercised, confers in a democratic system, managed care firms cannot reasonably hope to deflect criticism when their practices cause discontent. Likewise, the signals seemingly being sent by the public to policy makers are misleading as indicators of the true nature of the health care system's problems.

The author then provides a formal demonstration of the likelihood that democratic government will take excessive regulatory measures to appease unhappy consumers, erring systematically in the direction of protecting upper middle class consumers at the expense of middle- and lower-income ones. Further observations lead to an indictment of a political system that "remains wedded to providing health coverage through regressive tax subsidies, employment-based groups, and highly regulated health plans, all mechanisms through which the expensive tastes of [the elite minority] are invisibly subsidized by persons with either lower expectations or less ability to command attention to their health problems."

The lecture concludes by suggesting some non-prescriptive policies, including candid disclosure, better contracts, and greater legal accountability, that would enable managed care plans to achieve the legitimacy they need to serve (all) consumers well.

Suggested Citation

Havighurst, Clark C., The Backlash Against Managed Health Care: Hard Politics Make Bad Policy. Available at SSRN: https://ssrn.com/abstract=286452

Clark C. Havighurst (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7061 (Phone)
919-613-7231 (Fax)

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