A return to double digit rates of health insurance premium increases and widespread disenchantment with many of the strategies and tactics of managed care organizations have raised doubts about the capacity of managed care models to make a long term contribution to the health care sector. Public sector experience with managed care has both paralleled and contributed to some of the broader disillusionment. Many factors play a role in the declining ability of managed care models to deliver the added value they were expected to provide. Some of these developments relate to the practices and performance of managed care organizations. Other factors reflect changes in the operating environments and financial condition of health care providers. Still other indicators reveal shifting preferences among purchasers and consumers about what they want to buy and how and from whom they want to buy it. And the regulatory climate in which managed care is being carried out has seen dramatic developments.
The conversion of most private health insurance to network-based managed care arrangements has been characterized as a purchaser revolution. Disgruntled with steeply rising prices in the 1980s and disappointed by their inability to capture the attention or concern of health care providers, buyers revolted. As with political revolutions or coups d’etat, they attempted to topple the dominant provider regime and in the process establish themselves as the ruling party. To accomplish this transformation, buyers of health insurance turned to managed care organizations to help them pursue better value for the money they were spending. Managed care organizations came from two diverse worlds. One group included what had once been counter-culture prepaid group practice that had become “health maintenance organizations (HMO)” in the 1970s. The other group came from the traditional health insurance industry, which had provided coverage through unmanaged products for these same purchasers. Many of these latter organizations entered into managed care by developing preferred provider organizations (PPO) and then later developed HMOs.
though it merits mention that individuals hold markedly more positive impressions of their HMO than the HMO industry as a whole a phenomenon reminiscent of the schizoid view held toward Congress and one’s own congressman or congresswoman. The dramatically higher esteem in which hospitals and doctors are held, underscores how influential they have been in fueling some of the negativism and backlash toward HMOs as noted in additional KFF survey results.
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