ESTIMATING HEALTH EXPENDITURE GROWTH UNDER MANAGED COMPETITION - SCIENCE, SIMULATIONS, AND SCENARIOS

The estimated impact of health system reform proposals on health expen ditures influences the health system reform debate. Health expenditure growth rate (HEGR) estimates are particularly critical because small differences in rates over time create large differences in health expe nditures. There currently is no hard scientific basis for estimating t he impact of managed care/managed competition legislation and market d evelopments on the HEGR. For the 1994 health system reform debate, the two leading nonpartisan modelers developed qualitative scenarios abou t future health system developments in which managed care/managed comp etition would have little or no impact on the HEGR. We conclude that t here are alternative plausible scenarios, based on current health syst em changes interacting with potential legislation, in which managed ca re/managed competition will substantially lower the HEGR. We recommend that simulation models should provide a range of estimates that bette r reflect both market trends and the profound uncertainty about the ef fects of health system reform.