Strategies for Controlling Costs in Health Care

According to Bodenheimer and Grumbach, several mechanisms can be used to control costs in health care. In regards to financial controls, a competitive strategy is one of the best strategies because it does not involve government regulation. Rather, the finances usually flow through a competitive strategy that influences stakeholders in health care such as employees and employers to be more conscious when making purchasing decisions in health insurance ( Bodenheimer & Grumbach, 1995). Secondly, because this is a competitive strategy, health insurance plans are expected to compete based on prices, and this implies that the plans with lower costs will attract a high number of enrollees. Consequently, this strategy influences employers to be more aggressive while negotiating for health plans over premium rates. Therefore, unlike in cases where the government regulates financial costs, in this case, these costs are influenced by the level of competitiveness in the markets ( Bodenheimer & Grumbach, 1995). On the other hand, utilization (quantity) controls are the best strategy for managing reimbursement costs. 

In utilization controls, several factors can be considered to make this strategy successful. For instance, in cost-sharing, patients are supposed to pay directly for some health care services ( Bodenheimer & Grumbach, 1995). In a managed competition, cost-sharing will occur as part of the financial transaction when someone is buying an insurance plan. However, this strategy can discourage patients to demand for services. This is a shortcoming that requires the application of utilization management to encourage the intervention and surveillance of clinical activities carried out by the physicians ( Bodenheimer & Grumbach, 1995). This is a good strategy because unlike in cost-sharing where patients are discouraged to demand for care, utilization management primarily seeks to influence the physicians to provide services as required by the patients. 

Reference 

Bodenheimer, T. S., & Grumbach, K. (1995). Understanding health policy: A clinical approach (p. 259). New York.