Merritt Personal Lines Manual: Health Insurance: Managed Care HMOs, PPOs and Similar Programs: Conclusion
The roots of managed care go back to prepaid health plans of the 19th century, but many of the concepts used in today's health care system were embraced in ancient times. King Hammurabi of Babylon incorporated these same managed care concepts in the Codex Hammurabi -- a huge stone stele -- around 1700 B.C.
Among the similarities between the Codex Hammurabi and what we know today as managed care:
- rates set for various procedures: general surgery, eye surgery, setting fractures, curing diseased muscles and other specific health care services;
- fees set according to a sliding scale based on ability to pay;
- property owners to pay for health care for their households;
- objective outcome measurement standards to assure quality of care;
- outcomes information management to include data collection and evaluation;
- patient's rights to be publicized, explained and made known to all.
The Codex Hammurabi indicates that ancient Babylonians expected treatment something like that envisioned by the various versions of the patients bill of rights that are current today.
In the early 1990s, managed care plans surpassed indemnity plans as the most common mechanism for delivering health care services in the United States. Although the plans may seem like the innovation, they are in fact the rule.
Some facts about managed care in the United States, as of the late 1990s:
- Percentage of insured employees (working in firms with at least 10 employees) in managed care health plans: 66
- Percentage of doctors with at least one managed care contract: 75
- Percentage of doctors with at least one HMO contract: 48
- Percentage of HMOs that are for-profit: 69
- Percentage of HMOs that are not-for-profit: 31
- Percentage of HMO members in for-profit plans: 58
- Percentage of HMO members in not-for-profit plans: 42
- Percentage of HMOs that offer nutrition courses: 87
- Percentage of HMOs that offer smoking cessation courses: 67
Ultimately, the biggest issue facing managed care in the United States is whether all the talk of a patient's bill of rights will lead federal regulators or the court system (federal or state) to erode HMOs and PPOs so much that they cease to have any cost-saving advantage over other health coverage plans.
An example of this erosion came up in early 1999, when a California jury order Aetna/U.S. Healthcare to pay $116 million in punitive damages for refusing to cover experimental treatment for a cancer patient -- who eventually died.
In 1992, David Goodrich was diagnosed with a rare form of stomach cancer. Doctors in the Aetna HMO recommended that Goodrich undergo high-dose chemotherapy and a bone-marrow transplant. But the system's administrators denied the coverage.
However, nothing in the plan's handbook -- the main document about coverage issues that members receieved -- said that the treatments recommended by its own doctors were excluded.
One California-based managed care expert summed up the issues wrapped in the big verdict: "This shows the issue that is driving the consumer debate is the fear that plans are looking over the shoulders of doctors and are denying what a doctor perceives to medically necessary."
Managed care advocates would argue that the problems reflected in the Aetna/U.S. Healthcare case had been resolved years before. But the tide of public opinion was continuing to flow against managed care cost controls.
