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Hassle-Free Health Coverage: Chapter 5 Summary

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 1998:

- Number of HMOs in the United States: 574

- Number of PPOs in the United States: 1,036

- Number of Americans in HMOs: 51.0 million

- Number of Americans in PPOs: 50.2 million

- 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-forprofit: 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.Health care 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.Health care case had been resolved years before. But the tide of public opinion was continuing to flow against managed care cost controls.

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