Managed care in the United States

Abstract

Medical care in the United States continues to consume an increasing amount of the Gross Domestic Product. To control the rising costs of health care many industries have turned to a controlled form of financing and delivery of health care--often referred to as managed care. Many types of managed care exist, including preferred provider organizations (PPO), exclusive provider organization (EPO), and health maintenance organizations (HMO). HMOs involve prepaid premiums, limited panels of providers and assumption of financial risk on the part of the providers. A variety of HMOs are currently operating in the United States. Managed care involves taking risks by those who administer it. Some methods of controlling patient and physician behaviour by taking risks are capitation, risk pools and withholds. With capitation the physician is paid a 'per member per month' fee regardless of whether the patient uses the service. Risk pools are concerned with who shares the risk; for example, the primary physician shares the financial risk with specialists. Withholds involve a fee-for-service with a portion withheld which may be returned to the provider if he/she is parsimonious. A concern expressed about HMOs is the possibility of restricted services. Moreover, hospital expenses make up a large portion of the total health care dollar. In 1995 the average length of stay for a Medicare patient was 6.1 days as opposed to 3.9 days for the non-Medicare patient. Indeed, HMOs were the leaders in the development of same-day surgery and out-patient treatment. Increasingly, in the United States, public and social insurance plans are turning to managed care as a method to control health care expenditure. Some government insurance plans, such as Medicare and Medicaid, also increasingly offer managed health options. The trend, for now, in the United States increases enrollment in managed care plans. Although this is occurring at a rapid pace, managed care will probably not be the final solution to provision of medical care in the United States.