tently find little or no difference between the two (Chassin and Galvin, 1998; Miller and Luft, 1993; Schuster et al., 1998). But it is clear that some consumers have strong preferences for one delivery system over another, and that most prefer to have choice (Gawande et al., 1998; Ullman et al., 1997). Limited choice of health plans may or may not seriously constrain the choice of clinicians and hospitals, since plan networks vary greatly in size and structure (Lake and Gold, 1999). In the private sector, there has been a pronounced trend in recent years toward larger networks of providers in response to consumer demand for more extensive choice (Draper et al., 2002; Lesser and Ginsburg, 2000). In the absence of comparative quality information on providers, consumers apparently equate choice with quality.

The design and financing of some government health care programs result in frequent changes in eligibility and delivery system options that disrupt patterns of care delivery. Since the implementation of changes in Medicare payment policies stemming from enactment of the Balanced Budget Act of 1997, there has been a steady erosion of health plans participating in the Medicare+Choice program. Since 1998, 2.2 million Medicare beneficiaries have been involuntarily disenrolled from Medicare+Choice plans, affecting approximately 5 percent of beneficiaries in 2002. Of the health plans that remain, the proportion offering prescription drug coverage during the period 1999 through 2002 dropped from 73 to 66 percent, and the proportion charging zero premiums to beneficiaries from 62 to 39 percent (Gold and McCoy, 2002). Under Medicaid, beneficiaries move in and out of the program as their eligibility changes in accordance with minor fluctuations in income, causing beneficiaries to lose contact with providers and further complicating the tracking of care. For many eligible children and women, the re-enrollment process is initiated only when they present themselves at a hospital or physician’s office seeking service for an illness; this process results in adverse selection in capitated plans.

Lastly, efforts must be made to reduce administrative burden. In recent years, there has been a steady growth in regulatory requirements in most if not all of the government health care programs. The Secretary’s Advisory Committee on Regulatory Reform estimates that about two regulations are published each week, resulting in the promulgation of more than 120 regulations in each of the last two years (Wood, 2002). The American Hospital Association (2002) has identified 100 new or revised regulations pertaining to hospitals that have been issued by federal agencies since 1997, of which 57 are significant. Some of these regulations relate to quality enhancement processes and data requirements, while others relate to such areas as payment, patient confidentiality and privacy, and fraud and abuse.

Regulatory oversight is necessary, but it must be balanced and effi-



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