DataWatch: Potential Impact Of Managed Care On National Health Spending

Illustrative estimates suggest that if all acute health care services were delivered through staffor group-model health maintenance organizations (HMOs), national health spending might be almost 10 percent lower. If the delivery of all such services (except those now provided by staffor group-model HMOs) were subject to utilization review arrangements incorporating precertification and concurrent review of inpatient care, spending might be 1 percent lower. The estimates assume no changes in the health care system apart from expansion of these two forms of managed care to cover all insured persons. They also assume that moving to universal managed care would produce a one-time drop in the level of national health spending with no subsequent effect on spending growth. Managed care has attracted considerable interest as a possible way to constrain health care spending. Among workers who were covered by private employment-based insurance in 1990, 95 percent were in plans that used some form of managed care. These included several kinds of health maintenance organizations (HMOs), numerous forms of utilization review, and various arrangements based on specified networks of providers. This DataWatch reports the Congressional Budget Office’s (CBO’s) illustrative estimates of the reductions in national health spending that might result if all acute health care services now funded through insurance were delivered through two specific forms of managed care: staffor groupmodel HMOs and utilization review arrangements that incorporate precertification and concurrent review of inpatient care. Strong evidence exists that these forms of managed care reduce costs. Reliable evidence on other forms either is unavailable or fails to show significant cost savings. Forms Of Managed Care Examined Staffand group-model HMOs are unique among today’s managed care organizations in that they have integrated their systems for financing and delivering care. Staff-model HMOs own the clinical facilities that the insured population must use and employ salaried physicians to serve the HMO’s members exclusively. Group-model HMOs contract with multiVerdon Staines is a principal analyst in the Human Resources and Community Development Division of the Congressional Budget Office. on A uust 6, 2017 by H W T am H ealth A fairs by http://conealthaffairs.org/ D ow nladed fom