A year ago, an
article appeared in the New England Journal of Medicine explaining
that although two-thirds of all Americans working for mid-size
and large firms belong to managed- care plans, the growth of
managed care over the next decade may not be what it has been
in the last 10 years. The authors explored a range of problems
that managed care must face in the future - among them that purchasers
will investigate ways to avoid paying a 20 percent surcharge
for services they can negotiate directly. It is important that
HR executives remain informed about the future of managed care.
Writer Bob Kirsch recently interviewed three of the nation's
leading experts and asked each for their perspective on the future
of managed care as seen in 1998. Below these experts share their
views.
Eli Ginzberg, director,
the Eisenhower Center for the Conservation of Human Resources
at Columbia University in New York City and lead author of the
article.
Where is managed care
going now? In my view, the bulk of people suitable for enrollment
in managed care are already in it and, according to government
statistics, 160 million Americans are currently enrolled in these
plans.
These are mostly people
who had previously paid for medical care by fee-for-service or
had insurance that worked according to this basis. That leaves,
in theory, two groups of potential customers for managed care.
I am not impressed with the potential for either of these groups
to make the transition.
The first group is
the younger aged, [or] people a few years older than 65. Some
of these people, and especially those who are used to a managed-care
organization, will stay with managed care until they get sick.
But once they get sick, they will want to have more choices.
So I do not believe most of these people will stay with managed
care over the long run.
The other group is
Medicaid patients, and they have presented problems for managed
care. Although some people stay on welfare for a long time, there
is a big turnover overall in the Medicaid roles and half of those
receiving health coverage through managed care leave the program
in between one and two years.
Other major problems
are that the women and children who represent close to 70 percent
of those eligible for Medicaid mostly live in areas in which
there are relatively few doctors, and that there is no evidence
that managed care can provide acceptable services to the chronically
ill, disabled and blind while saving money.
Therefore, it seems
the bulk of the people on whom managed care has made most of
its money are already enrolled in managed-care plans.
As managed care's
ability to expand is becoming limited, problems with the services
it is providing are surfacing. Some in government and segments
of the public would like to put statutory constraints on managed
care. Doctors don't want to be told by MBAs how to practice medicine,
and patients want more choices.
Meanwhile, another
problem with the American health-care system is becoming more
visible than it ever was before: The uninsured are going to increase
in number, and as this happens, the United States may not be
able to continue with much current cost subsidization for medical
care.
The way this works
now is that wealthier patients are charged more than a minimum
amount and, in turn, many hospitals and medical centers provide
medical care for the uninsured - although the uninsured may not
receive 100 percent of the medical coverage they need. Instead
they receive 60 percent.
At the same time,
wealthier Americans have gotten perhaps 20 percent more medical
care than they actually needed. In the future, providers are
going to be pressed by the buyers to give the lowest possible
price for medical services.
But once this happens,
providers will be financially unable to take care of uninsured
patients. So, subsidization is under serious challenge.
What all this means
- in particular the problems with managed care and those with
the uninsured - is that the country is at the beginning of some
considerable difficulties in the organization of the medical
coverage provided to Americans.
I do not think the
system through which we in the United States finance health care
at present is sustainable. Nor do I think managed care will prove
capable of making this system work overall.
To explain the basis
for my viewpoint, it is necessary to review briefly how the country
developed its unique way of financing medical care, a structure
unlike that used by any other advanced country in the world.
It is also important
to explain that the upper echelons of executives at most corporations
have a great deal to gain by continuing the present system.
During World War II,
the Treasury Department gave permission for the use of pretax
dollars by both employer and employee to pay for medical insurance.
This has grown to be a $100-billion-a- year subsidy that mostly
helps affluent Americans. That is one reason most corporations
have remained in the business of providing health insurance to
employees.
Otherwise the corporations
might say to the government, "You take care of the health-care
problem." But if the government did that then the upper
income people who work for business would not continue getting
as big a subsidy as they do, or they might receive no subsidy
at all.
The establishment
of Medicare has been beneficial; however, when it started Medicare
was predicted to cost the country approximately $10 billion by
1990 while in fact we've spent close to $100 billion a year on
it. The reason the prediction was way off was that, for the first
time in American history, a government benefit was separated
from any kind of dollar control. People were given whatever kind
of medical care they wanted or whatever kind of medical care
their doctor thought they ought to have. The bill was sent to
the government or to the private employer.
And, corporations
were very slow in recognizing that increases in premiums were
going through the roof. Managed care was finally able to slow
the rate of increase in premiums in the 1990s - at that time
there were wasteful practices, and managed-care organizations
were able to reduce the extent of this.
Problems with America's
health-care system - in particular with managed care and with
the uninsured - have grown to the point where we are seeing an
upswing in the cost of insurance coverage, and I expect the upswing
to continue.
In addition, the future
of the larger American system for financing medical care is very
uncertain.
I will not be surprised
if by the election year 2004 the country will reach a new consensus.
I expect that by then the government, federal and state governments
combined, will provide basic health insurance for everyone.
This coverage will
not guarantee a very good level of care, but there will be some
car for everyone. Anyone who wants better care will pay for it
out of their own pocket or have it paid from their employer's
pocket.
The government is
already contributing in 1998 $600 billion on medical care in
this country. I envisage a situation in which early next century
the government will pay 55 percent to 60 percent of all dollars
spent on health care, insurance will pay 35 percent, and the
remaining 5 percent to 10 percent will be paid for out of pocket.
I am not saying that
what I am describing is certain to happen. But it is a possibility.
And the reason for that is the system through which we now finance
health care does not appear to be sustainable, nor will managed
care be able to provide an adequate solution for the larger problems
developing in the American health-care system.
Richard B. Saltman,
professor of Health Policy and Management at the Rollins School
of Public Health at Emory University in Atlanta.
In the United States,
the essential concern over the long term in regard to the future
of managed care is not whether physician-provider groups or physician-hospital
groups are going to attempt to cut out insurers. The essential
concern is about a much more fundamental question - whether in
the long run the entire for-profit managed-care project will
prove to be financially affordable and politically viable.
It is increasingly
clear that it is not financially affordable in the long term,
certainly not in a world that is globalizing. Other developed
countries spend half of what we do to achieve equal or better
and certainly more comprehensive, services. But this is tricky
territory because the U.S. health system has not been financially
viable for the last 10 years, although the congressional leadership
and private investors just came to that realization late last
year.
In terms of political
viability, managed care is dependent upon external pressure that
is probably not sustainable over the next decade. On one side
of the spectrum, conservatives are increasingly insistent in
plumping for what can be seen as a counter revolution of the
right that seeks to establish medical savings accounts, the return
in financial terms to fee-for-service medical care, and an end
to the collective aspects of private health insurance.
On the other side
of the spectrum, there are those in Congress who continue to
search for some broad regulatory mechanism capable of channeling
managed care into a more socially responsible direction, both
in the area of access to care and that of quality of care.
However, the real
difficulty that will over the long term impede the political
viability of for-profit managed care is that average middle-class
citizens have reached a negative consensus about managed care.
One might characterize a middle-class opponent of managed care
as a premium payer who has actually tried to use the system to
obtain health services and benefits.
The members of the
middle class don't know what they do want - but they know that
they don't want managed care.
What this suggests
is that there is no center, no essential commonality of attitude
and accepted approach, among the American public that can be
used to construct and maintain the type of political agreement
that any health-care system requires over the long term.
Add to this: The full-blown
version of managed care appears essentially to have run out of
new areas of development in the United States. One can interpret
managed care as being an effort to combine a number of mechanisms
that have been used fairly effectively in European health systems
over the past generation - things such as gatekeeping, conservative
practice patterns for physicians and fixed budgets for providers
- with a series of technical mechanisms that facilitate review
of physician and hospital behavior, including quality of care
instruments.
During the past decade,
managed care has attained a clear success in attaining certain
well-defined goals. At this point, one or two of the more recent
technical mechanisms developed in the United States - the clinical
audit of medical behavior, for example - may be useful to European
health systems. However, the past successes do not make managed
care necessarily sustainable over the long haul.
This fact, coupled
with the financial and political factors that were mentioned,
suggests that we are in for a period of intense volatility with
no clear outcome yet on the horizon.
The one thing we can
be sure we will not see over the next decade is a stable health-care
system that provides adequate care to an overwhelming percentage
of the citizenry.
Robert Brook, director,
the Rand Health Program in Santa Monica, Calif.
A human resource executive
would do better to focus on the issue of quality in medicine
rather than on the future of managed care.
Quality has been a
problem for a long time in the American health-care system. There
is no evidence that it has grown worse under managed care, nor
is there evidence that it has grown better.
It makes sense to
focus attention on obtaining value for your dollar. That means
obtaining solid information on the quality of health car being
provided to your employees. The problem is that such information
is not now being produced in the market.
Managers should consider
joining forces to provide funding to develop better measures
of quality of care. These in turn should be used to provide better
information about quality to employees of their companies.
