Federal regulation of managed care: an impulse in search of a theory?

Abstract

Although there is growing demand for regulation of the managed care industry, regulatory proponents have yet to articulate a clear theory of regulation. Most observers acknowledge consumer information problems that regulation could address, but there is no consensus regarding regulation of the broader public concern about restrictive medical-necessity determinations by health plans. Concerns about these issues--which fall within the gray areas of divergent clinical opinion--may be difficult or impossible to address by explicit regulation. If policymakers forbear on regulation of medical-necessity determinations, private market innovation may ultimately remedy this problem.