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<p><strong>You Are Here:</strong> <span class="crumb_link"><a href="/" class="crumb_link">AHRQ Archive Home</a> > <a href="/research/resarch.htm" class="crumb_link"><em>Research Activities</em> Archive</a> > <a href="." class="crumb_link">October 2002</a> </span></p>
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<td><h1><a name="h1" id="h1"></a>Health Care Costs and Financing </h1>
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<p>This information is for reference purposes only. It was current when produced and may now be outdated. Archive material is no longer maintained, and some links may not work. Persons with disabilities having difficulty accessing this information should contact us at: <a href="https://info.ahrq.gov/">https://info.ahrq.gov</a>. Let us know the nature of the problem, the Web address of what you want, and your contact information. </p>
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<h2><a name="head1">Managed care's reliance on supply-side control of services does not necessarily eliminate least valued treatment</a></h2>
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<p>Managed care's efforts to control the use of health care services has led to widespread dissatisfaction and calls for major reform and consumer protection. Consumers and health care providers most dislike rules about which services may be reimbursed in what circumstances (preauthorization) and financial incentives to providers to choose less costly treatments or simply no treatment. In a recent commentary, Meredith B. Rosenthal, Ph.D., of the Harvard School of Public Health, and Joseph P. Newhouse, Ph.D., of Harvard University, note the lack of evidence that such supply-side rationing mechanisms do, in fact, eliminate more low value than high value treatment. </p>
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<p>Managed care organizations apparently assume that consumers and providers attach the same value to specific services or, if not, that provider values should trump consumer values because providers have superior knowledge. The increasing use of coinsurance in managed care and the introduction of tiered copayments (for example, lower copayments for generic versus brand name medications) represent a return to greater demand-side rationing. This brings consumer willingness-to-pay more into the equation. In this case, consumers can decide for themselves whether goods or services are worth the additional cost. </p>
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<p>Outside of low-income and vulnerable populations, cost sharing has a role to play, not only as an alternative to supply-side incentives to achieve lower spending, but also as a mechanism for eliciting willingness-to-pay, explain the authors. Their work is supported in part by the Agency for Healthcare Research and Quality (HS10803). They call for research on the nature of provider and consumer rationing decisions to inform incentives that will lead to an efficient allocation of health care services.</p>
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<p>See "Managed care and efficient rationing," by Drs. Rosenthal and Newhouse, in the Summer 2002 <em>Journal of Health Care Finance</em> 28(4), pp. 1-10.</p>
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