MANAGED HEALTH CARE -
Managed Health Care Today and Chiropractic OnLine Today is pleased to provide to Doctors and
the Public, current information about the present Health Care System.
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In 1994, President Clinton attempted to restructure the current
Health Care system in the United States. In this first installment,
Chiropractic OnLine Today will provide viewers with background
into the development of the current reimbursement system in the
Health Insurance began back in 1929, when an administrator
at Baylor University Hospital in Dallas, Texas, conceived the
nation's first health plan. For the sum of fifty cents a week,
Dallas schoolteachers received up to twenty-one days of free hospital
care. This eventually led to the creation of the present insurance
giant, Blue Cross/Blue Shield.
Today there are approximately 74 state and local Blue Cross/Blue
Shield plans across the nation, covering approximately 73 million
Also entering the game were a number of private Insurance
companies, such as Prudential and Travelers', to name a few. Then,
the Federal Government became a player, as they created two different
programs, Medicare and Medicaid. Finally, add into the mix a number
of self-insurers. These are companies that insure their own employees
and are governed by the federal Employee Retirement Income Security
Act (ERISA). Add all the players together and you have
a general overview of those who control third party Reimbursements
in this country.
This appears to provide the consumer with a choice in the
type of health insurance coverage they would like to purchase.
A brief description of these choices follows.
These insurance plans have been the most common over these
past few decades. These plans usually have 3 parts: Those that
reimburse for Hospital charges, those that reimburse for Doctors
bills, and those that reimburse for Major Medical coverage, i.e.,
filling in the gaps between the other two parts.
After a Deductible has been met by the patient, the insurance
company will reimburse a percentage of the fees charged by the
physician for any services rendered.
Some criticisms of this type of reimbursement plan include
First, while traditional insurance policies protect against
the financial costs of illness, preventive health care such as
regular physical checkups, well-baby care, breast examination,
and birth control, are rarely covered in the basic package.
Further, many analysts feel that this system is largely to
blame for the current crisis in health care. Stanford University
economist Alain Enthoven contends that doctors who are paid for
whatever they recommend are prone to prescribe expensive treatment
and order many tests. Further, if the patient's insurance company
is willing to pay for these services, the patient has no incentive
to demand lower costs. "The traditional system reward hospitalization,
high technology, and extensive testing at the expense of prevention,
'well-body' care, and less costly treatments."
(CONSUMERS' LEGAL GUIDE TO TODAY'S HEALTH CARE.
Issacs, Swartz, C @1992, Mifflin Company, p.42).
This term has become the "catch-phrase" of the '90's,
but what exactly is Managed Health Care?
As mentioned above, under the traditional Fee-For-Service
reimbursement choice, health care costs have skyrocketed. The
initial tally's from 1993 include the following figures:
--Medical inflation in 1993 was 5.4 percent, according
to the Labor Department.
--Though medical prices are not going up as quickly
as in previous years, the Commerce Department estimates total
health spending will break the $1 trillion mark this year for
the first time.
Thus, there appears to be a need for controlling this rise
in Health Care costs in this country. Enter the concept of Managed
Health care. With Managed Health care, insurance plans COMPETE
for contracts to care for large numbers of patients - most
of them in groups.
While the concept of Managed Care is relatively a new concept
to the East Coast, Managed Care has become firmly entrenched on
the West Coast. For example, 96% of Los Angeles employers offer
Managed Care programs, and more than 70% of their employees choose
As the concept of Managed Care has been around for a while,
but it is only recently that it has penetrated the East Coast
The two more common types of Managed Health care programs,
include Health Maintenance Organizations (HMO's) and Preferred
Provider Organizations (PPO's).
HMO's provide a comprehensive range of medical care in return
for a fixed monthly fee from the consumer. This fee covers all
visits to doctors in the HMO, except for a $3 to $5 charge for
each visit. The monthly fee usually includes preventive care as
When the consumer enters an HMO contract, they choose a Primary
Physician, also known as a GATEKEEPER. This Gatekeeper
will refer the patient to a specialist if they believe that the
patient needs to see one.
According to the Group Health Association of America, as of
1992, there were 37 million Americans enrolled in approximately
PPO's on the other hand function in the following manner.
An insurance company, employer, or a union, will Contract with
a group of Physicians to provide care at DISCOUNTED RATES. While
the patient/member is not required to see a participating provider,
there is plenty of financial incentive for them to stay within
PPO's come in many forms, and in 1991 it was estimated that
26 million Americans belonged to some form of Preferred Provider
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