Incomplete Markets and Imperfect Institutions: Some Challenges Posed by Trust for Contemporary Health Care and Health Policy

As contemporary health policy promotes evidence-based practices using targeted incentives, policy makers may lose track of vital aspects of care that are difficult to measure. For more than a half century, scholars have recognized that these latter aspects play a crucial role in high-quality care and equitable health system performance but depend on the potentially frail reed of providers’ trustworthiness: that is, their commitment to facets and outcomes of care not easily assessed by external parties. More recently, early experience with pay for performance in health settings suggests that enhancing financial rewards for the measurable undermines providers’ commitment to the unmeasurable, degrading the trustworthiness of their practices. Reformers have looked to revised professional norms or reorganized practice arrangements to bolster the intrinsic motivations required for trustworthiness. We suggest here that these responses are likely to prove inadequate. We propose that they be complemented by a renewed policy-making commitment to nonprofit ownership among health care providers, insurers, and integrated delivery systems. We identify some of the concerns raised in the past with ownership-based policies and propose a set of responses. If these are pursued in combination, they hold the promise of a sustainable ownership-based policy reform for the United States.