Managed care is a broad term that defines an organized healthcare system that aims to decrease and eliminate ineffective or irrelevant services that contribute to cost reduction while maintaining high-quality healthcare (Chung & Mullner, 2020). There are two primary kinds of health care organizations: health maintenance organizations (HMOs) or preferred provider organizations (PPOs). When relying on different strategies to reduce costs, including selective contracting, innovative economic incentives, and utilization review, the managed care system faced reforms, debates, and meaningful moments that will be discussed further.
- The early years of managed care development (1910 to the mid-1940s). The initiation of managed car systems can be traced to the 19-century ending when several doctors decided to provide prepaid medical care to unions (Chung & Mullner, 2020). In 1929, several professionals pursued more comprehensive health plans, including hospitalization and health maintenance. In 1937, the Group Health Association and the Kaiser-Permanente Medical Program in 1942 were established and attracted many enrollees (National Council on Disability, n.d.).
- The mid-1940s to the end of the 1960s: the rise of managed care advantages. In 1947 and 1957, the Health Insurance Plan of Greater New York and the Group Health Plan of Minneapolis were formed. By 1955, 70% of employed individuals had health benefits, primarily for hospitalization (Fox & Kongstvedt, 2013). Till the 1960s, the HMOs spread out across the US in the form of paid fees for specific services and started playing the insurance function.
- The 1970s to the mid-1980s: the rise of managed care programs and associated costs. The enactment of the Health Maintenance Organization Act of 1973 gave a primary trigger to the spread of managed health care (National Council on Disability, n.d.). Opposition from the medical executives resulted in the establishment of regulatory restrictions on HMO operations. Nonetheless, national health costs and health plan utilization multiplied. In 1982, Medicare changed the payment system from the cost-based to a fixed-based for patients (Fox & Kongstvedt, 2013).
- The mid-1980s till 2000s: consolidation and backlashes. Managed care usage soared and expanded further in the 1980-90s into all health sectors. Both consolidation and specialization began in the industry, while small companies became disadvantaged. In the 1990s, the managed care backlash appeared due to consumers’ expectations of health care costs reduction from employees and inconsistencies in authorization and coverage decisions (Fox & Kongstvedt, 2013).
- 2000 to the present time: costs increase, coverage decreases, services’ variation continues. The government-sponsored Medicare and Medicaid programs have expanded significantly till 1999, but then faced reversed growth when increased payments were introduced in 2000-2004 (National Council on Disability, n.d.). The Patient Protection and Affordable Care Act was introduced in 2010 to reduce payment levels and get more people insured, even though health care costs exceeded economic growth (Manchikanti et al., 2017). It led to various debates about the system and plans that overlook effective cost management methods. In 2020, the variation of rules, capabilities, and specific services in the managed care systems are still in place and had to be reviewed carefully (Rosenbaum et al., 2020).
Today the public debates on the controversial managed care services continue due to the expansion of out-of-network options. Nevertheless, the mass market managed care plans are prevalent in the American community. In the future, the diversity of consumers and patients will be broader as the dynamics of ethnic and racial communities change. Therefore, capabilities of managed care plans to address specific subsegments will be required to serve the population (Mani et al., 2019). Furthermore, it can also be suggested that cost management and operations will be enhanced, innovative technologies will be used to assess necessary services that will include social determinants of health (Mani et al., 2019). Overall, it can be concluded that new reforms in the managed care will be introduced based on ROI, technologies, and competitors that would disrupt existing plans with transformative models of health care services provision.
References
Chung, K. & Mullner, R. (2020). Managed care. Encyclopedia Britannica. Web.
Fox, P. D. & Kongstvedt, P. R. (2013). The essentials of managed health care. Jones & Bartlett Learning.
Manchikanti, L., Helm Ii, S., Benyamin, R. M., & Hirsch, J. A. (2017). A critical analysis of obamacare: affordable care or insurance for many and coverage for few? Pain physician, 20(3), 111–138. Web.
Mani, M., Linzer, K., Martin, C., & Latko, B. (2019). Five trends shaping the future of Medicaid. McKinsey. Web.
National Council on Disability (n.d.). Appendix B. A brief history of managed care. Web.
Rosenbaum, S., Velasquez, M., Somodevilla, A., Gray, E., Morris, R., Handley, M., & Beckerman, Z. (2020). How states are using comprehensive Medicaid managed care to strengthen and improve primary health care. The Commonwealth Fund. Web.