Health Care Spending, Competition, And Data Infrastructure: Q&A With Martin Gaynor

posted by Alicia Caramenico

on January 20, 2016

blog martin gaynorIn March, health care economist Martin Gaynor delivered a keynote speech during AHIP’s National Health Policy Conference in Washington, D.C. We caught up with the Carnegie Mellon economics professor to find out about trends in U.S. health care spending, and the important role information plays for consumers, policymakers, and industry leaders.

“There is a lot of price variation. And it’s a big driver of variation in federal spending, both within geographic areas and across them,” Gaynor told AHIP Coverage in an interview.

How does access to health care price information address issues with health care pricing and variation?

Gaynor: Some early evidence seems to indicate that getting consumers information does help in terms of generating more competition and driving down prices. We do know that people have very little information about what health care will cost them out of their own pockets. Logically, if you give people more information, it couldn’t hurt and very well might help.

In what ways can the health insurance community help move health care toward a value-driven system?

Gaynor: Trying to provide their members with information about price and quality, to the extent that they can get it, and trying to help consumers with making health care decisions. When you think about choosing a cell phone plan, you expect it to be complicated and overwhelming and don’t always make the best choices. We can provide people with the tools to make the choices that are best for them; that’s one thing insurers can do.

Another thing is continuing to engage in selective contracting – contracts based on value, quality, and cost. Selective contracting is making sure enrollees get value for their dollars. It can take a variety of forms – standard networks, narrow networks, tiered networks.  Also, providing feedback to providers on how they’re doing in terms of value proposition. Some providers don’t know how they’re performing.

What do your research findings tell us about competition in health care markets?

Gaynor: Broadly speaking, there’s a large body of evidence that in hospital markets, competition leads to seriously lower prices. The opposite, less competition, can lead to substantially higher prices.  There’s some evidence on the impact of competition on quality – the evidence is more mixed but points toward competition leading to better quality of care. With quality, research is still in the early stages; quality is harder to measure.

We have so many critical decisions to make in health care, and we don’t have the infrastructure in the form of data to get us the information we need to make these very important decisions.

What will it take to get the data infrastructure to that level?

Gaynor: The data exists; the data are there. And we have what we need in terms of information technology. What we need is the will. Data holders have to find a way to cooperate enough to make this happen.

What would you like conference attendees to take away from your keynote address “Emerging Trends and Enduring Challenges in U.S. Health Care Spending”?

Gaynor:  The importance of information – none of this knowledge would be possible without information. The critical role data and information has to play going forward – both in terms of insurers getting important information to enrollees, but also insurers finding a way to come together so their data can be used in a broader sense for the public.

This interview has been condensed and edited for length and clarity.

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