ECON
Benefits and risks associated with managed care.pdf

4 2 less competition or even the emergence of

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4 2. Less competition or even the emergence of monopoly structures in both provider and insurance markets due to closer relations between providers and insurers as well as between insurers and their insured. 3. More difficulty in receiving services from providers not included in a contract (the level of difficulty depends on the way a particular contract deals with services from outstanding providers). In our opinion, the main barriers to managed care provision in Slovakia include a vague definition of services paid for from public expenditure, lacking competition in the insurance market, inefficient management of large hospitals, high information asymmetry between health care providers and patients as well as insufficient oversight over and enforcement of treatment quality. Addressing these barriers could help minimize the risks associated with managed care. 2. Managed Care The basic idea behind health insurance is that in exchange for a fee paid by the insured an insurance company covers the costs of her health care to an agreed extent (or to the extent required by law). Thus the insurance company takes on the risk of possible health care costs, in other words, if the need for health care services arises, the insurance company covers the c osts. The insurer’s risk may be higher compared with the hypothetical risk borne by an uninsured person herself. If she were uninsured, chances are, she would try to keep her costs down by paying for the optimal amount of treatment. Her responsibility for her health care costs would be associated with a high risk. However, if she pays an insurance company to take on her risk and is herself no longer directly responsible for her costs, her risk declines. It is likely she will receive more treatment than necessary. The amount of financial risk associated with health care delivery also depends on the providers’ motivation. If they do not share the risk the probability of increasing costs tends to be higher. Managed care lowers the risk transferred to the insurance company. The idea behind managed care is based on coordinating healthcare to prevent unnecessary or avoidable claims within the delivery of services while maintaining the required level of quality. Such claims include duplicate or superfluous tests, prescribing more expensive medication when cheaper alternatives are available, excessive hospitalization or claims resulting from the occurrence of illnesses and complications that can be avoided with prevention and quality therapy. The health care provided can be coordinated based on insurer-provider cooperation defined in the contract; and/or on motivating patients as well as health care providers by ensuring that they bear a part of the financial risk associated with the received/ provided care.
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  • Spring '16
  • Health Maintenance Organizations

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