For better or for worse, most health plans in the U.S. today are some form of managed care. Nearly 90% of Americans with health insurance are covered by HMOs and other managed-care plans. The reason for the shift from the traditional fee-for-service system to managed care was to improve the quality of health care and hold down costs. Things haven't exactly panned out that way. Daily headlines rail against problems with managed care and the fact that millions of Americans can't afford health coverage at all.
How Did We Get Here From There?
Not too long ago, most people with health coverage went to whatever physician they wanted whenever they wanted and their insurance company reimbursed them a certain amount of their medical bills. Health-care consumers or employers had to pay part of the price tag plus a hefty deductible. When this type of fee-for-service system became too steep, managed care seemed like a good solution because it promised to deliver affordable quality care if consumers, doctors, and hospitals agreed to certain cost-containing restrictions.But it is those very restrictions that are now the eye of the current storm over managed care. Patients often argue that they can't use the doctors they want or get all the treatments they need because of cost controls. And doctors complain that their relationships with patients have become strained because insurers prevent them from providing top-notch care. To add insult to injury, managed-care plans have raised their rates, forcing employers to cut back or even eliminate benefits for their workers.
As a result of all these problems, health care is once again a hot topic in Washington, where congressmen have come up with two versions of a "patients' bill of rights." Down the road, this bill will give managed-care members more control. They might, for one thing, be able to sue a plan for medical malpractice. Many states aren't waiting for the Feds to do something, they've already passed laws that give patients greater leverage.
Some managed-care firms are tying to iron out difficulties on their own before being hit by lawsuits. The big news in late 1999 was that United Health Group announced their doctors would no longer be required to get prior approval for care they deemed necessary for their patients. Though United Health will still review doctors' decisions after they are made and encourage physicians to keep costs down, it is hoped that this policy change is an important step toward lessening insurer interference.
Until all the kinks are worked out of the health-care system (and that won't happen overnight), consumers have to do some legwork to find the best health plan for their needs. Health Pages makes that effort a little easier with this basic guide to managed care and Report Cards on managed-care plans from around the country, which will help you compare what's out there.
What Is So Different About Managed Care?
Before managed care became so widespread, most people picked their own doctors and hospitals. If they needed a specialist, they usually did not have to get approval before making an appointment. Insurance coverage for such a fee-for-service system often involved paying high deductibles and filling out claims forms for every doctor visit and prescription in order to get reimbursed.To improve this system, managed care sought to emphasize disease prevention and health education, eliminate the paperwork, and slash the price tag of medical services. It's true that members of managed-care plans don't have to deal with claims forms, and they have few out-of-pocket expenses aside from a monthly premium and small charges at the time of a doctor visit (called copayments). As for the medical professionals affiliated with managed-care plans--they are supposed to see to it that patients receive neither too much nor too litte care. That's something fee-for-service plans never claimed to do. Under those plans, there was very little investigation by insurers into what services were provided and why.
The trade-off for all this is that members have to adhere to certain restrictions. For instance, they must use the plan's specific network of doctors and hospitals. Members who decide to use providers outside the network have to pay all of the bill or a large portion of it.
Managed care is not a new concept. The earliest HMO originated in 1929 at the request of the Los Angeles Department of Water and Power. Later, in 1969, the National Governors' Association supported a proposal for national health insurance to contain massive health care inflation. The Nixon administration, searching for an alternative that minimized the role of government, saw Health Maintenance Organizations as a way to reverse the illogical financial incentives that paid physicians and hospitals for illness rather than health. Nixon's 1971 HMO legislation provided planning and startup funds. It envisioned 1700 HMOs in operation by 1976, enrolling 40 million people. HMOs served only 9 million people by 1980, but by 1997 they served 77 million.
