Hello. My name is Wynand van de Ven. I'm an Emeritus Professor of Health Insurance. My major research interests are regulated competition in health care and international comparison of healthcare systems. Previously, the theory of regulated competition in health care has been explained. You learned how competitive health care markets ideally should work. In practice however, it turns out that it is very difficult to have such an ideal, competitive health care markets. In this video, you will learn about 10 preconditions for achieving efficiency and affordability in competitive health care markets. You may consider these preconditions as a checklist of what needs to be done if a country wants to implement regulated competition in health care. That is, competition on the health insurance markets and the healthcare delivery markets. We assume that the goal of governments is to achieve efficiency and affordability in health care. Well, what would you mean by efficiency and affordability in health care? We describe these key concepts as follows. The efficiency goal relates to technical and allocative efficiency of both the delivery of care and the provision of basic insurance. Technical efficiency refers to maximizing outputs from giving resources. For example, producing a certain medicine for the lowest possible cost. Allocative efficiency refers to the best possible use of given resources in order to benefit society. For example, no unnecessary use of medicines. In short, improving efficiency is getting more value for money. With affordability, we mean that everyone has financial access to health insurance that covers a basic care package of services. The services should be of acceptable quality and should be accessible within reasonable travel time and without undue waiting time. So our definition of affordability includes accessibility. The specific interpretation and the definition of efficiency and affordability that you may use in practice may depend on the norms and values in society. In the previous video, you learned that no other markets of substantial importance violates the requirements of perfect competition so radically as health care markets. Therefore, in health care markets, the invisible hand of the market must be complemented with a visible hand that sets the rules of the game. For example, government regulation. A market completely influenced by self-interest is not desired for health care markets. It this video, we will identify and discuss the most important preconditions for achieving efficiency and affordability in market-based health care systems. Our list of 10 preconditions has been developed by a group of researchers that I was part of from five countries; Belgium, Germany, Israel, the Netherlands, and Switzerland. Together, we wrote an article that was published in the scientific journal, health policy. You can find it in the readings. A common feature of these five countries is that there is competition among health insurers. In addition, these insurers are responsible for purchasing the care for their insured or providing them with medical care. When thinking about what our countries could learn from each other, we came up with a list of 10 specific preconditions that are crucial for achieving efficiency and affordability in competitive health care markets. For example, there should be free consumer choice of insurer. Otherwise, there cannot be competition among insurers. Another precondition is that there should be sufficient consumer information, for example, about the quality of the insurers and the health care providers. Otherwise, there cannot be a cost-conscious trade-off between price and quality. In two other videos, the 10 preconditions will be discussed in more detail. Most of them are typically not fulfilled in unregulated competitive health care markets. So they are specific for regulated competition in health care markets. In addition, several general requirements can be discerned that are necessary to let markets function effectively. There should be for example, a non-corrupt government, a system of property rights, independent judges, a well-functioning banking system, and a well-functioning system of general taxation. In most OECD countries, these general requirements are largely fulfilled. In the next videos, we will therefore not focus on them. However, there may be other countries in which these general requirements are not fulfilled. If that is the case in your country, it's important to think about the potential consequences for the health care system. The major takeaway of this video is that for achieving efficiency and affordability in competitive health care markets, 10 specific preconditions must be fulfilled. I hope to see you again in the next videos where you will learn more about each of these preconditions.
