The Rising Cost Of Health Care

By 1970 the rising cost of health care coverage as a percentage of the Gross Domestic Product of the United States caught political attention. Health Maintenance Organizations as thought of today began under the Richard Nixon administration in an effort to the control federal healthcare spending (Rodwin, 2010). The federal government created subsidies to start HMOs, encouraged their use in Medicare and Medicaid, and encouraged commercial HMOs (Rodwin, 2010). Due to differing political aims the structure not only included efforts to control costs through oversight of medical practice, physician payment, and influence decisions about medical care, the legislation also included benefits to set a foundation for those policy makers seeking a pathway to nationalized health insurance by including comprehensive benefits, open enrollment and community rating (Rodwin, 2010). These competing aims resulted in HMO premiums costing as much as traditional plans (Rodwin, 2010).

The many common features of health care plans today began with HMOs, such as coverage for preventative services and prescription drug benefits (Kongstvedt, 2013). Other features of the HMOs were: a) closed networks where only services could be provided by an HMO doctor, b) capitation where providers were paid a fixed amount based on the number of patients covered, c) the primary care provider as a “gatekeeper” to refer to specialists, d) required pre-authorization for elective procedures to ensure medical necessity, e) encouragement of outpatient procedures over inpatient, and f) oversight to reduce hospital length of stay (Kongstvedt, 2013). Additional trends of HMOs during the 1970 and 1980s to control cost that continue today were the process of utilization review of ...

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...e of the 1990s and consumers who had not previously experienced utilization control were starting to have requested services denied. This heralded a backlash against HMOs and legislation that protected patient’s rights to appeal denials. Today both cost and access are large issues in health care. The ACA’s requirements for expanded coverage and oversight on premiums and medical loss ratio as well as reimbursement under Medicare and Medicaid are resulting in premium adjustments in the private insurance market, increased consolidation in health care provider systems, and intense focus on reducing readmissions and preventable hospital acquired conditions. Managed Care has not been influenced by one goal or one voice but by a balance of conflicting goals and stakeholders as cost, access, quality, and choice are balanced by providers, insurers, government and patients.