Managed Health Care

Managed Health Care

Of the approximately 257.8 million individuals currently living in

the United States of America, every one of them has a need for

effective, affordable and accessible health care coverage and

services. Within the past thirty to forty years, the scope and

cost of health care coverage and services has drastically changed,

altering the manner in which health care was previously managed.

There are several factors that have affected the cost of health

care coverage over the course of the past two to three decades.

One of these factors is the introduction and rapidly increasing

enrollment in managed health care insurance plans. Managed care

health insurance plans can, in most cases, help to alleviate the

rising costs of effective medical coverage. Another important

factor that has affected health care costs is the invention and

implementation of new medical technologies. As prominent

researchers and economic analysts have discovered, there is a

distinct and direct correlat! ion between advancing medical

technologies and rising health care costs. Medical innovation has been

proven time and again to be an important determinant of health care

cost growth. It would appear that managed care health insurance plans,

which attempt to lower health care costs, and highly expensive new

medical innovations and procedures are at cross purposes, pulling

against one another in very different directions. Market-level

comparisons have found the cost growth of health care in markets with

greater managed care penetration to be generally slower than that of

non-managed care health insurance markets. However, managed care is

unlikely to prevent the share of gross domestic product spent on health

care from rising unless the cost-increasing nature of new medical

technologies changes.

Managed care health insurance plans differ greatly from

indemnity fee-for-service, or FFS, insurance plans. Since the

early 1970's, rapidly growing enrollment in managed care health

insurance plans has transformed the health insurance market in

the United States. Virtually nonexistent in most markets three

decades ago, managed care health plans covered 63 percent of

the nation's employees by 1994. Managed care incorporates a

range of features that allow the insurer greater influence in

the process of care delivery. Managed care plans aggressively

contract for lower prices from physicians and hospitals and

attempt to constrain the use of health care services by

monitoring providers and changing provider incentives. Health

insurance providers that operate under the fee-for-service

concept grant the consumer much more freedom of choice

concerning doctors and treatment programs, thus freeing the

consumer of any feelings of discontent with "interfering"

insurance companies. ! Consumers of indemnity plans, however,

pay a price for that freedom by way of drastically higher rates and