Vol. 1. No. 5

Managed Care in the Next Millennium?
by Ruth M. Aaron

Making predictions for the next century is a favorite past time of self-designated futurists. The Managed Care Insider recently read these predictions:

• Hospital costs will go still higher as hospitals everywhere are forced to pay their employees better wages .... But hospitals will be forced by budget problems and by pressure from insurance groups to make some stringent economies in the use of their facilities.
• Physicians' fees will probably remain steady. After all, doctors never had it so good as they do today.
• Medical insurance will continue to grow until almost everybody is covered for almost every kind of treatment. The cost will go up as broader types of benefits are included, and this may cause widespread complaints from those who rebel against spending a sizable sum for protection against illnesses that may never occur.
• Some nations have shoved the medical cost problem under the rug by adopting socialized medicine, although this usually means that they end up paying the same bills in taxes instead of cash. The U.S. at the moment seems far more likely to find its own solution through insurance plans of one kind or another.
• All of us are worried by the high cost of modem medicine and we sometimes think of the modern doctor as a cold-blooded automaton who does not care very much about us.
• Most Americans seem to feel that voluntary medical plans are the best guarantee that the old personal relationship between doctor and patient will be revived and strengthened, as the medical profession learns the proper proportion between science and human understanding. ¹

Putting Managed Care in Perspective: A Few Key Facts

Health insurance and managed care are recent additions in the U.S. For most of the century, the financing of health care services has been the responsibility of the individual, with a little help from charities and government in the form

of public facilities. The U.S. private health insurance industry started in 1929 with the development of the forerunner of a Blue Cross Blue Shield plan in Texas. The first managed health care organization was Kaiser Permanente in the 1930s, established to provide comprehensive prepaid health care to workers constructing the Grand Coulee Dam. The Social Security Act of 1963 was the federal government's initial attempt to provide "universal access," but only for the elderly, disabled and low income. The term "health maintenance organization" first appeared in the 1973 HMO Act, along with enabling legislation.

The Clinton Administration tried to enact comprehensive health care reform in 1994, proposing radical overhaul of the private insurance system and creating "managed competition" to provide universal coverage through a combination of public and private (employer) sources. The price tag was too high and increased governmental control was too frightening. The legislation was defeated.

Since then we have seen hospital and insurance company mergers, integrated delivery systems, physician practice consolidation, management service organizations (MSOs), physician-hospital organizations (PHOs), the increase in for-profit financing and ownership, increased managed care enrollment, HMO hybrids, decreased local autonomy, increased out-of-pocket expenses, reduction of safety net services, decreased access, and increased numbers of uninsured and underinsured.

And how do Americans perceive their health status? Are we satisfied with our health care system? In 1959, another LIFE magazine article reported the following statistics on patient satisfaction:

• One out of every seven doctors sooner or later so dissatisfies at least one of his patients that he is sued for malpractice.
• A nationwide study commissioned by the American Medical Association showed last April that 44% of all people interviewed have had "unfavorable experiences" with doctors, 32% of them so unsatisfactory that they said they would never go back to the same doctor. People complained that doctors could not be reached in emergencies, that they did not spend enough time with each patient, that they charged too much and made mistakes in diagnosis and treatment. 2

PATIENTS' BILL OF RIGHTS

How Does the U.S. Public Perceive the Value of Their Health Care/Insurance System?

In September 1999, the major federal legislative initiative focused on protecting Americans from managed care: hence, the Patients' Bill of Rights. Barry R. Bloom, Dean of the Harvard School of Public Health, writes in a recent issue of Newsweek that this legislation will affect but a minority of Americans, only a subset of those with insurance, and that there are bigger issues on which to focus.

Table 1: Per Capita Spending, Percent of GDP - 1996
Table 2: Infant Mortality Rates - 1996

Bloom further comments, "In this century, life expectancy has risen by more than 30 years, due largely to public health, not medical interventions. The real issue is not how to make group health plans pay more, but how to keep Americans from getting critically ill in the first place. Of the 2 million deaths that occur in the United States each year, half are preventable."³

The More Things Change, The More They Stay the Same

So what does this mean for the twenty-first century? Will mid-century publications cite the same concerns? Will managed care still be around? Will there be universal access? Will it be more successful? Will we be healthier? Will U.S. health dollars translate into better health status? Stay tuned!

1. Havemann, Ernest. Challenge of Mounting Expenses: Individual hospital care, new techniques save more lives but can eat up savings. LIFE, Nov. 2, 1959: 82-98.

2. Young, Warren R. Rx: For Modem Medicine Some Sympathy Added to Science. LIFE, October 12, 1959: 145-160.

3. Bloom, Barry R. Patient Power: The Wrong Rights. Newsweek, October 11, 1999: 92.

About the author: Ruth M. Aaron's experience spans 20 years of health care management for hospitals, physician practice organizations and HMOs with a focus on the provider perspective, enabling her to integrate provider requirements with operational necessities.