800 pound gorillas can be friendly

Today’s Arkansas Democrat-Gazette has an article that explores the implications of having the local Blue Cross Blue Shield plan dominate the market, as is the case in Arkansas. (Blue Cross posts hot ’04, but rising costs stalk field, by Brian Baskin.) I’m quoted as saying that while it’s important to keep an eye on the Blues to avoid excesses, there are some positive aspects. I’ve seen high-share Blues do a number of innovative things, including BCBS of Massachusetts’ subsidies for e-prescribing and sponsorship of the Massachusetts eHealth Collaborative. A number of Blues are promoting online doctor-patient messaging. Why is this?

  • In healthcare, only payers with high market share have the power to drive innovation. We see this most starkly in single payer, socialized systems such as the UK, where the National Health Service has driven innovation in electronic medical records, electronic prescribing, and pay-for-performance to a much greater degree than has occurred in the US
  • Government monopolies, such as Medicare, Medicaid, and the VA System, despite all their flaws, have shown themselves capable of leading and sustaining innovation. Private payers usually adopt Medicare’s ideas
  • Healthcare is mainly a local business, so national companies such as Aetna, Cigna, United, and Humana are usually fairly unsuccessful at eroding local Blues’ shares, as long as the local Blue is providing reasonable service
April 24, 2005

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