Charging boldly into the labyrinth of health care reform, the Clinton Administration now seems to be fixing on the courses that it hopes will lead to its general goals. These courses have much to commend them, but they are not without risks.
The first course points toward what has come to be known as the "managed competition" model. Shorn of its complexities, it simply means that the Administration appears to have opted for a general model for health care that is a more logical product of a free market system than, say, a government-operated system. The latter would likely bring with it some kind of program of federal health-care price controls and onerous central bureaucracy. By contrast, the former approach seeks to harness the powerful forces of competition to control costs while maintaining quality. It would do this by encouraging the formation of large networks of health-care consumers--individuals and employers--thus doctors, hospitals and insurance companies would compete to provide the best service for a reasonable price. Some within the Clinton Administration are said to be pushing for strict cost controls along with managed competition; such a coupling seems incongruous.
This editorial page, which has endorsed the principles of California's Garamendi Plan (a managed competition approach to which the Clinton people say they are drawn), is more comfortable with the California plan's policy direction than with any attempt to impose federal price controls. The risk for the Clinton Administration is that while managed competition may look great in theory, it simply may not work in practice.