Why Haven Healthcare Failed

Hi John,
I agree with the three reasons you cite for Haven’s failure. The emphasis on market power is particularly important. It’s worth noting that the vast majority of medical care provided is local; so, market power must be local to provide a countervailing weight to the consolidation in medical care delivery. Of course, as an economist, I whole-heartedly agree with your view that the perverse effects of fee-for-service incentives must be replaced by a serious form of medical provider risk sharing such as capitation.

Your notion of buy-in to a Medicare Advantage approach is intriguing, but given what Medicare pays providers under these programs, huge resistance by the medical community would ensue with the results determined by political logic, not the delivery of value to the population. I favor two approaches: development of a local purchasing cooperative (see our work at http://www.foxvalleyhealthcare.com) and the expansion of the federally facilitated exchanges. For the latter to provide affordable, high quality options, the $300+ billion of income tax exemption devoted to subsidizing employer sponsored medical insurance would need to be markedly repurposed to a subsidy inversely related to household income.

Marty Finkler