ECON
Benefits and risks associated with managed care.pdf

The share of hdhpsos in the employer market grew from

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The share of HDHP/SOs in the employer market grew from 0% in 2005 to 17% in 2011. It is primarily used by larger companies with more than 1,000 employees. Table: Individual insurance programs’ market share in the employer market by number of employees Traditional insurers HMOs PPOs POSs HDHP/SOs 1988 73% 16% 11% 0% 0% 1993 46% 21% 26% 7% 0% 1996 27% 31% 28% 14% 0% 1999 10% 28% 39% 24% 0% 2003 5% 24% 54% 17% 0% 2006 3% 20% 60% 13% 4% 2011 1% 17% 55% 10% 17% Source: Kaiser, 2011 (b) This table highlights the development of the various forms of managed care, currently used by nearly all US employers. PPOs are the most common, as they offer favorable conditions to insurers and employers but allow patients to seek treatment outside of their networks as well. The table also shows a sharp rise in demand for plans with deductibles. Multiple analyses explore the rise of managed care and its influence on health care costs and quality (see Miller, 1997; CBO, 1994; Cutler, 1997). According to Cutler, in 1997, only 5% of privately insured Americans made use of managed care in 1980, in 1987 the proportion rose to 25% and in 1995 to 75%. The proportion of those insured with HMOs, the strictest form of managed care, rose from 16% in 1987 to 48% in 1995, while the share of those insured by PPOs rose from 11% to 25% over the same period. However, substantial differences exist between individual states. While 80% of privately insured Californians subscribed to managed care, the share was close to zero in Alaska or Wyoming. According to Cutler’s study the average per capita health care expenditure in California in 1980 was 17% higher than the national average, but fell back to the national average level by 1993. Similar comparisons show that a 10% rise in insurance by HMOs may amount to a 0.5% slow-down in the growth of health care expenditure annually. Cost savings arise mainly due to cutting back on the length of hospital stays, while the number of hospital stays remains unchanged. Among the largest US managed care providers is Kaiser Permanente, a company insuring 8.7 million Americans and employing 167, 000 employees, including more than 14,000 doctors. The insurance branch of Kaiser Permanente operates as a non-profit while providers are for- profit businesses. Within managed care, Kaiser Permanente places emphasis on preventative care, compensating doctors with fixed incomes rather than for particular procedures as well as on chronic illness management, which emphasizes out-patient care in order to minimize expensive hospital stays. (Source: Wikipedia: Kaiser Permanente ).
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9 Managed care is currently experiencing a renaissance in the USA, enjoying popularity among an increased number of the insured. Managed care attracts employees, whose employers no longer cover the full extent of their ever rising insurance fees. Employees instead receive a fixed grant to use towards a medical plan of their choice. The demand for managed care is also associated with the government-funded Medicaid program, designed to cover medical care costs of poor Americans working with both non-profit and for-profit private insurance companies. Medicaid is the largest healthcare program in the USA, at least one in five
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  • Spring '16
  • Health Maintenance Organizations

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