This Issue Brief discusses
the evolution of the health care delivery and financing
systems and its effects on health care cost management
and describes the changes in the health care delivery
system as they pertain to managed care. It presents
empirical evidence on the effectiveness of managed care
and concludes with an analysis of the potential of future
health care reform to influence the evolution of the
health care delivery system and affect health care costs.
Between 1987 and 1993, total
enrollment in health maintenance organizations (HMOs)
increased from 28.6 million to 39.8 million, representing
an additional 11.2 million individuals, or 4 percent of
the U.S. population. At the same time, new forms of
managed care organizations emerged. Enrollment in
preferred provider organizations increased from 12.2
million individuals in 1987 to 58 million in 1992, and
enrollment in point-of-service plans increased from
virtually none in 1987 to 2.3 million individuals in
1992. In addition, the percentage of traditional
fee-for-service plans with some form of utilization
review increased to 95 percent in 1990 from 41 percent in
1987.
Measuring the effects of the
changing delivery system on the costs and quality of
health care services has been a difficult task, resulting
in considerable disagreement as to whether or not costs
have been affected. In a recent report, the Congressional
Budget Office recognizes two new major findings.
First, managed care can provide cost-effective health
care at a level of quality comparable with the care
typically provided by a fee-for-service plan. Second,
independent practice associations can be as effective as
group- or staff-model HMOs under certain conditions.
In the future, we are likely to see
a continued movement of Americans into managed care
arrangements, an increase in the number of physicians
forming networks, a reduction in the number of insurers,
an increase in the number of employers joining coalitions
to purchase health care services for their employees, and
a health care system that is generally more concentrated
and vertically integrated.