The roadmaps to managed competition: theory and practice

Context and relevanceEqual access to health care is a continuous concern for governments in developed countries.As systems are progressively confronted with the rise in healthcare costs, policymakers face growing financial pressures, which trigger regulatory responses.In this context, the managed competition model emerged, with its theoretical foundations established in Alain Enthoven's seminal (1978) work.This model gained traction during the 1990s, in what Cutler terms the third wave of 'medical care' reforms, responding to the perceived problems in healthcare systems (ie.increasing costs, inefficiencies, quality concerns), as well as dominant economic theory and the political climate (Cutler, 2002).These reforms focused on incentives, particularly competition, to promote efficiency and responsiveness to consumers.Nevertheless, there are substantive reasons for caution.Competitive markets tend towards risk rating, which can result in unaffordable costs for individuals with expensive medical conditions.Moreover, health care is often viewed as a 'right' or moral imperative (Handel and Ho, 2021), whereby market-based incentives might conflict with equity goals.As a result, competitive reforms have remained tentative.Influential country reforms included the Netherlands' Dekker Plan, which led to full implementation by 2006 (Schut and Van de Ven, 2011); the Clinton reform (Diamond, 1992); and reforms in Switzerland (Schneider, 1996).Notably, similar principles were implemented under different labels, with 'internal market' reforms in the UK NHS (Le Grand, 2009) and later in Sweden, New Zealand, and parts of Spain.In the last 30 years, the model of managed competition and its application have evolved.Both policymakers and health economists have strived to provide a theoretical framework in which the classical economic trade-off of equity and efficiency is balanced in the contemporaneous setting.Notable contributions include the work of Van de Ven et al. (2013), in which the authors developed a list of 10 preconditions to achieve the goals of equity and efficiency and evaluated their achievement in selected countries (Belgium, Germany, Israel, the Netherlands, and Switzerland); work by McGuire and Van Kleef (2018), which laid out categories of specific regulatory tools that are available to achieve the model and provide a comprehensive review of health plan payment in countries ranging from Australia, the USA, to China; and lastly, Van de Ven et al. 2024 follow-up study, which evaluated the progress of the five original countries over the 2012-2022 decade.This work reveals a series of theoretical and practical challenges this model faces currently.While it provides a solid economic foundation paired with regulatory tools to integrate aspects of