Between 1985 and 2000, the healthcare industry experienced restructuring, and innovation. There was rapid growth, and maturation in HMOs (Health Maintenance Organizations) in the year 2000, but there was a decline in these Organizations shortly after this period. Since then, there has been a shift towards reimbursement models, which transfers risks away from the government and toward health insurers, and providers. Medicaid, and Medicare now outsource delivery of healthcare services to managed care plans, and these plans absorb risks related to healthcare costs related to those enrolled in these plans. This model of care has replaced the concept of paying fee-for-service (FFS) to healthcare providers (Parys, 2014).
Managed Care Plans have become the favored model in the healthcare market. The Affordable Care Act that has been signed into law by President Obama is an example of this favored model that reduces healthcare costs. This Act ensures that millions of young adults have access to health insurance. Preventative services are now more affordable for the majority of American citizens. This Act reduces costs, and improves the quality of care through different performance programs. This has resulted in a reform in Medicare payment, and improvement in the quality of care enrollees receive.
The Affordable Care Act promotes Managed Care Plans that will decrease costs, and move the health care system towards higher quality, and efficient care to millions of young adults who now have health insurance (“Reducing Costs and Improving the Quality of Health Care, n.d.”)
What is the Managed Care Movement?
The Health care sector has maturated, and evolved in recent years. This evolution assumes an economic form that transcends economic benefits of other sectors; this form is mirrored in the “managed care” sector. The mid to late 1990s saw a rise in economic power, which changed how the managed care industry conducted business. Unemployment rates were extremely low at this time, which resulted in strong corporate profits. As the economy boomed, employers found themselves competing for employees, which in turn started the Managed Care Movement (“The Origins of Managed Health Care, n.d.”).
It is difficult to understand the current state of the United States health care system, without having in-depth knowledge of managed care organizations (MCOs). It is imperative to know what they aim to do, what management tools they incorporate, and why consumers prefer to join these organizations, instead of staying with the traditional FSS insurance plans.
A wide variety of organizations support the managed care philosophy. The reason for tis is that MCOs are involved in both the delivery of high quality care, and provision of health insurance plans (“Managed Care, n.d.”). Medicaid embraces this plan because instead of paying FSS every time an enrollee receives medical service, it enroll the beneficiaries in a government run health plan, which is responsible for taking care of the beneficiaries. Removing the cost from the health insurers, and providers; which reduces health care costs (Parys, 2014).
Do Managed Care Plans reduce costs?
There is a difference between the traditional FFS (Fee for Service) plans, and managed care plans. The major difference is that the managed care model incorporates incentives that directly reduce healthcare costs (Parys, 2014). Reduction in costs and utilization are profitable to the economic sector. In state-authorized plans, the government reimburses managed care plans, which means that plans will absorb any financial risk if the cost of their healthcare exceeds the amount allowable by the government. Consequently, these plans benefit from when they either reduce the average cost per visit, and the numbers of visits an enrollee makes to reduce their overall healthcare cost. This computation is mirrored in managed care plans, and so many are enrolling at startling numbers.
The Managed Care Movement is based on more young adults having accept to health insurance, increase in quality of medical care, all while saving close to 27 million dollars in health care costs (Parys, 2014).
- Managed Care. Retrieved from http://www.aw.com/info/phelps/Chapter11.pdf
- Reducing Costs and Improving the Quality of Health Care. Retrieved from
- Parys, J, V. (2014). How Do Managed Care Plans Reduce Healthcare Costs? Retrieved from
- The Origins of Managed Health Care. Retrieved from