Managed Care Plans: Characteristics, Growth, and Premium Performance

Over the past dozen years, network-based managed care plans have undergone a remarkable transformation. At the beginning of the 1980s, managed care plans occupied a niche in a marketplace dominated by indemnity insurance plans. By 1993, managed care plans accounted for a growing majority of health plan enrollees. Moreover, enrollment in newer forms of managed care quickly surpassed that of the older group and staff model HMOs. Beginning as hybrids of elements of group and staff model HMO plans and of the old FFS system, these newer types of network-based plans have evolved as they have grown. Reacting to rapidly rising health care premium costs, employers wanted to move their employees and dependents relatively quickly into managed care plans. However, employers and enrollees were not prepared to make a rapid, wholesale shift from indemnity insurance and FFS towards the older, more restrictive type of group and staff model HMO plans. Moreover, intermediaries and providers were not prepared to accommodate such a shift, even if employers and employees wanted it to take place. Indeed, many of the major actors--employers, enrollees, health benefit intermediaries, physician networks, medical groups, hospitals and integrated delivery systems--have had to ascend very substantial managed care "learning curves". Although we have witnessed the overall movement of many enrollees from managed care plans that closely resembled the indemnity insurance plans toward plans with more similarities to the group and staff model HMOs, the extent of the changes has varied markedly among the dozens of local market areas, and even within local market areas. As the health care system evolves, the number and complexity of different types of contractual managed care relationships are increasing almost exponentially. The resulting difficulty in classifying managed care plans has implications for health services researchers. Increasingly, it is important to compare performance among health plans not at the level of the entire health plan, but at the level of the provider organizations or networks that actually provide health care services to enrollees. The Medical Outcome Study adopted this approach (12, 21, 35), providing useful insights into the dual effects of risk-sharing and provider organization on health care utilization, quality of care, and enrollee satisfaction. As well, if managed care plan classifications are to be meaningful, it is important to clearly specify the characteristics of the provider organization and the rest of the delivery system in whatever research is undertaken.(ABSTRACT TRUNCATED AT 400 WORDS)