David Durenberger: “the phrase managed competition has achieved a great deal of currency in the debates on health care reform. It is…”

“the phrase managed competition has achieved a great deal of currency in the debates on health care reform. It is therefore regrettable that the concept of managed competition is often misrepresented and misunderstood. Managed competition is not about Government. It's about markets, and making markets work. In its essence, managed competition is a simple concept. It is based on the fact that competition among providers of services for the business of informed consumers drives prices down, and drives quality and innovation up. That's the definition of a market. Under managed competition, Government is used to facilitate the market through incentives, not replace the market with regulation. I cannot stress enough, Mr. President, that managed competition is not just a theory. It is up and working in communities all over America. Minnesota happens to be one of the leaders in competitive health care delivery systems on the managed competition model. By reducing costs and improving quality, Minnesota's market is providing health care at a cost 15 percent below the national average. And the California Public Employees Retirement System--Calpers--has shown that a large health care purchasing agent can succeed in putting downward pressure on premium costs. After 4 months of negotiations with California HMO's, Calpers has concluded a deal that will reduce health care premiums for its members by an average of 1.1 percent.”