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Drawing on observations from tracking changes in local health care markets over the past ten years, this article critiques two Federal Trade Commission and Department of Justice recommendations to enhance price and quality competition. First, we take issue with the notion that consumers, acting independently, will drive greater competition in health care markets. Rather we suggest an important role remains for trusted agents who can analyze inherently complex price and quality information and negotiate on consumers' behalf. With aggregated information identifying providers who deliver cost-effective care, consumers would be better positioned to respond to financial incentives about where to seek care and thereby drive more meaningful competition among providers to reduce costs and improve quality. Second, we take issue with the FTC/DOJ recommendation to provide more direct subsidies to prevent distortions in competition. In the current political environment, it is not practical to provide direct subsidies for all of the unfunded care that exists in health care markets today; instead, some interference with competition may be necessary to protect cross subsidies. Barriers can be reduced, though, by revising pricing policies that have resulted in marked disparities in the relative profitability of different services.

Objective: To determine how the capacity and viability of local health care safety nets changed over the last six years and to draw lessons from these changes., Data Source: The first three rounds (May 1996 to March 2001) of Community Tracking Study site visits to 12 communities., Study Design: Researchers visited the study communities every two years to interview leaders of local health care systems about changes in the organization, delivery, and financing of health care and the impact of these changes on people. For this analysis, we collected data on safety net capacity and viability through interviews with public and not-for-profit hospitals, community health centers, health departments, government officials, consumer advocates, academics, and others. We asked about the effects of market and policy changes on the safety net and how the safety net responded, as well as the impact of these changes on care for the low-income uninsured., Principal Findings: The safety net in three-quarters of the communities was stable or improved by the end of the study period, leading to improved access to primary and preventive care for the low-income uninsured. Policy responses to pressures such as the Balanced Budget Act and Medicaid managed care, along with effective safety net strategies and supportive conditions, helped reinforce the safety net. However, the safety net in three sites deteriorated and access to specialty services remained inadequate across the 12 sites., Conclusions: Despite pessimistic predictions and some notable exceptions, the health care safety net grew stronger over the past six years. Given considerable community variation, however, this analysis indicates that policymakers can apply a number of lessons from strong and improving safety nets to strengthen those that are weaker, particularly as the current economy poses new challenges.

Every two years, researchers at the Center for Studying Health System Change (HSC) interview health care leaders in 12 nationally representative communities to assess changes in local health care markets. The third round of site visits is under-way, and early findings from 2000-2001 indicate significant changes in health care financing and delivery are taking place across the country. This Issue Brief discusses developments in managed care, hospital consolidation, physician-hospital tensions, risk contracting and health plan premiums. State and federal policy makers charged with balancing cost, coverage, access and quality of health care should consider these emerging trends in their decision making.