Does Managed Care Lead To Better Or Worse Quality Of Care?

Prologue: One of the current realities of health policy making is that anecdotes far outweigh solid evidence when it comes to shaping the attitudes of people in relation to the performance of managed care. This phenomenon has been driven by legislators looking for political expedients that respond to a growing but still small number of consumer complaints and by media coverage that focuses on individual events rather than a broader picture of the impact of managed care. This paper aims to go beyond the anecdote to survey the evidence. One of the time-honored methods that health services researchers use to determine patterns of behavior is a rigorous review of the peer-reviewed literature, which authors Robert Miller and Harold Luft employ in this paper to compare the performance of health maintenance organizations (HMOs) to that of fee-for-service plans. While the information gleaned from these searches is not as current as one would like—given the rapidly changing nature of the system—Miller and Luft deliver a new perspective on the quality of care rendered by HMOs compared with the traditional system. This paper builds on the earlier evidence of managed care plan performance that Miller and Luft published in the Journal of the American Medical Association in 1994. Miller is an associate professor of health economics at the University of California, San Francisco. Luft is the Caldwell B. Esselstyn Professor of Health Policy and Economics at the same university and director of its Institute for Health Policy Studies. Both researchers have outstanding reputations as persons who are in the forefront of helping us to better understand the transformation of American health care. ABSTRACT: We analyzed evidence on managed care plan (mostly health maintenance organization, or HMO) performance from thirty-seven recently published peer-reviewed studies. Quality-of-care evidence from fifteen studies showed an equal number of significantly better and worse HMO results, compared with non-HMO plans. However, in several instances, Medicare HMO enrollees with chronic conditions showed worse quality of care. Evidence comparing hospital and physician resource use showed no clear pattern, whereas evidence on enrollee satisfaction varied by measure and enrollee type. Although recent research provides useful findings, interpreting and generalizing from these relatively few studies is difficult. Fears that HMOs uniformly lead to worse quality of care are not supported by the evidence, although all quality data were collected prior to the recent round of cost cutting that started in 1992. Hopes that HMOs would improve overall quality also are not supported, in part because of slow clinical practice change, lack of risk-adjusted capitation rates, and inadequate quality measurement and reporting.