Health Plan: The Practical Solution to the Soaring Cost of
By Alain C. Enthoven
2002/03 - Beard Books
1587981238 - Paperback - Reprint - 222 pp.
This book is must reading for all those concerned with cost of health care as well as for those instrumental in effectuating necessary reforms.
This informative book takes a close look at the serious problem of rising
healthcare costs, a dilemma that has plagued our healthcare system from the time
this book was first published in 1980. The author, who is a preeminent voice in
health care policy, analyzes the growth of healthcare spending, studying such
factors the impact of insurance coverage, the tax laws, fee for service,
technology, the aging population, and cost reimbursement for hospitals. He
argues that there needs to be a fundamental reform of the financing and delivery
system itself. The elements of the advocated reform are set forth in a clear and
persuasive manner. One proposed solution is the Consumer Choice Health Plan, a
plan for universal health insurance based on managed competition in the private
From Henry Berry, Nightingale’s Healthcare News, December 2006:
The main causes of runaway medical costs, which were identified by Enthoven in 1980, continue today. Among the causes are the growth of medical technology, an aging population, and the proliferation of physician specialists. Lax cost controls by health maintenance organizations and government health agencies are another cause.
Unlike many other critics, Enthoven does not advocate free-market practices in the healthcare field. He offers an approach that is more knowledgeable, nuanced, and practical. The author searches for the elusive goal of formulating a health plan that takes into account the altruistic desires of U.S. society to address the needs of all its members, while also accepting the reality of government regulation, a profit-driven industry, and a population with varied healthcare needs and objectives.
Enthoven names his comprehensive health plan the Consumer Choice Health Plan. The Consumer Choice Health Plan is ambitious and far-reaching, especially considering the inertia of the present healthcare system and its layers upon layers of vested interests.
Nonetheless, the author states that his plan is within reach and sustainable because it “function[s] with existing institutions operating in new ways.” While healthcare delivery would be kept fully in the private sector, the government would have a formative role by managing the enrollment of organizations and companies in the plan on the basis of compliance with “a system of rules designed to foster socially desirable competition.” Government would also help individuals take part in such a plan by offering tax credits and vouchers “based on both financial need and predicted medical need.”
As the book progresses, one begins to see how the Consumer Choice Health Plan synthesizes and employs in novel ways parts of the healthcare system as it presently operates. Besides the formative role of government, the plan would involve “fair economic competition, multiple choice, [and] private underwriting and management.”
Enthoven’s Consumer Choice Health Plan is not radical. It calls for altering relationships among existing components of the health system, giving them new roles and purposes. The plan does propose one sweeping, though not radical, change, which is to “shift the basis for healthcare financing from experience-related insurance serving employee groups to community-rated financing and delivery plans open to all eligible persons in a market area.” By shifting the financing of healthcare, providers and consumers are brought into close, and often direct, contact. To protect consumers from fraudulent and inferior health plans, the government would play a primary role in establishing enrollment standards and policies. The different health plans would compete among the respective consumer groups according to the main qualification that they be engaged in “socially desirable competition.” Thus, the health plans that would be available in any market would operate much like branches of today’s corporate health providers.
The government’s role, then, would primarily lie in exercising oversight and enforcement responsibilities. The result would be a field of screened health providers offering health plans in a defined community/market. The most successful providers would be those offering the best services and prices.
As reasonable as Enthoven’s recommendations are, he realizes that they cannot be applied immediately. Consequently, the author also offers a series of steps, some of which are options, that assist in fully implementing the plan. Among these steps are requiring employers to provide employees choices in medical plans, allowing tax credits for employers and employees for those plans offering good basic care (rather than more costly health plans), and working with influential government officials to reach the goal of the Consumer Choice Health Plan.
Some of Enthoven’s recommendations have been introduced to areas of the healthcare system, and have achieved demonstrable, though limited, improvements. Many of his recommendations have been embraced by legislators and policymakers as requisites for a workable national health plan. Anyone wishing to have a relevant, productive role in devising such a plan will want to take this book to heart.
Alan C. Enthoven’s career spans more than 40 years in the public and private sectors, where he has held many top positions. During this time, he has been chairman and director of major healthcare organizations, and he continues to work to bring positive changes to the healthcare system.
From Kala Ladenheim
These are among the many iterations of what has become "managed competition", the center-piece of the Clinton health care proposal. For lo these many years Enthoven has been promoting a national health plan based on private sector competition as a means of achieving a uniquely American system for universal health care coverage in the United States. He calls for a system that encourages the development of HMOs, decouples coverage from employment, offers multiple choices and requires consumers to pay the real difference in prices among competing plans. Working within the rules of classical economics (including Arrow's critique) he has constructed a proposal that in theory would alter incentives and control costs while maintaining quality of care. The more recent article calls for employer-based coverage in order to maintain the current private-sector financing.
Alain C. Enthoven is a Senior Fellow, Center for Health Policy, Institute for International Studies, and the Marriner S. Eccles Professor of Public and Private Management, Emeritus, in the Graduate School of Business at Stanford University. He holds degrees in Economics from Stanford, Oxford and MIT. He has been an Economist with the RAND Corporation, as Assistant Secretary of Defense, and President of Litton Medical Products. Mr. Enthoven has been a director of the Jackson Hole Group and PCS, and is now a director of eBenX, The Integrated HealthCare Association, and RxIntelligence. He is a consultant with Kaiser Permanente. Mr. Enthoven is a member of the Institute of Medicine of the National Academy of Sciences and a fellow of the American Academy of Arts and Sciences. Photo from