Can managed care plans control health care costs?

Abstract

The health insurance sector has been transformed in the past fifteen years, with managed care replacing indemnity insurance as the norm. This transformation was intended to change the nature of competition in the health care system so that market forces could be used to control costs. Empirical studies have shown that this objective has been met, as areas with high managed care penetration have tended to have much lower rates of increase in their costs. Creating a more efficient health care system will require additional efforts to produce useful measures of quality and to maintain competitive markets.