Competitive bidding and private insurers' innovation

Austin Frakt makes a very solid point in general about health care here—that we should want our cost curve bending/shifting to come from efficiency improvements and extends this critique to the proposal of competitive bidding discussed earlier. Frakt wonders whether it would bend the curve.

The authors’ claim here is that private insurers would have an incentive to work with caregivers in order to beat their bid on any given senior. That’s the claim as to whether competitive bidding would bend the curve, and it’s hard to assess whether it’s correct.

Insurers are already clearly thinking along these lines, with UnitedHealth announcing an effort to do a cloud-based data platform (with outside developers creating “apps,” no less.) One of the interesting apparent proposals:

Among the initial apps will be one developed with the help of the Cleveland Clinic that helps health providers structure payments for "bundles" of care, meaning for all services tied to a particular procedure or condition, Optum said.

I’m sure that’s purely coincidental. I’m also sure it’s purely coincidental that UnitedHealth happens to be interested in moving to a bundled payment system and getting 70% of its commercial members in it by 2015. It's probably just a short jump until we're discussing insurers purchasing hospitals again, to get that full degree of integration.

At any rate, I’m sure that’s what the AEI people are thinking about, although time will tell whether it’s successful.