Impact Of Managed Care

1. Introduction One of the hottest issues nowadays in the United States is the rising continuously rising trend of health care expenditures. There are heavy debates about the role of government and insurance companies and the possible solutions. However, little can be heard about the experiences and outcomes of the previous attempts that aimed to restrict health spending. However, during the long tradition of rising health care costs there was a temporary break in the 1990’s. The period of this break actually corresponded with the time of ‘managed care revolution’. The time, when special types of health care plans aiming to reduce health care costs (managed care) expanded with huge amount. At the end of the 1990’s almost 90% of the US population took part in some form of managed care. But the special features of managed care (restricted choice, fixed salaries, and lower prices) were not welcomed by everyone. The public, the media and the politicians turned against managed care and end of the 1990’s was characterized by managed care backlash. Managed care was accused to pay little attention to patients in order to save costs for the institutions. As a reason, the cost containment activities of such institutions were limited greatly by the states. Although we do not know the exact effect of managed care institutions on health care quality and prices it is not considered as a possible solution for rising health care spending. To fill this gap I collected the most important theoretical and empirical investigations on the impact of managed care. The structure of my paper is the following. First I identify the trend of heath care costs over time, compared to other countries. Then I present an investigation of possible heath care cost ... ... middle of paper ... ... health care trend. I found that while former, theoretical analyses do not attributed the cost stagnation to the effect of managed care, newer estimations find strong evidence on price decreasing effect of it. The latest investigations could control for all the special characteristics and systematic differences between the managed care and the traditional insurance companies. For this reason Pinkovsky’s results are the most reliable evidence on the impact of HMOs. If we accept the price declining effect of managed care, the states should build down the regulations of managed care institutions. However, better information of the population and the health sector actor is crucial to avoid the previous misinterpretations. Moreover, the managed care institutions have to be incentivized to create contracts that are available and acceptable for less healthy people also.