Perverse Incentives, Statesmanship, and the Ghosts of Reforms Past

We are on the verge of health care reforms aimed at increasing access for the uninsured while decreasing costs. Such reforms will require better integration and deployment of health care personnel and facilities. This will be difficult given the perverse incentives (in many cases, the residues of past reforms). Mirroring societal values, these incentives have resulted in a system skewed toward technologic and subspecialty solutions rather than preventive, primary, and long-term care. If the promise of this reform movement is to be realized, statesmanship will be required at all levels by all concerned.

We have entered one of those reform moments when the impossible seems possible. Although health care is the leading candidate for reform, Henry Aaron, an economist at the Brookings Institution and coauthor of the prescient Painful Prescription [1], has counseled against expecting passage of comprehensive legislation during the first hundred days of President Clinton's term of office [2]. The period may be too short to achieve a consensus among the competing factions [3, 4], even given the favorable climate. Pure and simple, true reform will require compromise and statesmanship by all concerned.

Most proposals are aimed at two competing goals: reducing costs and increasing access for the millions of uninsured. They principally involve some form of budget limitation or “managed competition” and the mandating of a yet to be defined universal minimum benefit package. Other possible reforms include insurer consolidation to reduce administrative overhead and the “hassle factor,” tax code changes to promote more equitable health insurance subsidies, and tort reform to decrease defensive medicine and to compensate fairly iatrogenically injured patients.

None of these proposals deals directly with the most fundamental and sensitive issue, namely how to achieve a more rational deployment of health care providers and services. Anyone asked to design an …