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Hassle-Free Health Coverage: How Managed Care Works Introduction

The broad health coverage provided by traditional insurance plans provides little incentive for efficient cost-effective health care delivery. Starting in the 1980s, it became clear that too much money was being spent on health care in the United States. One response from insurers and providers was to reorganize the health care delivery system into a form of managed care.

Managed care imposes controls on the use of health care services, usually through health maintenance organizations (HMOs) or preferred provider organizations (PPOs).

Managed care plans can be organized as for-profit (commercial) corporations or non-profit corporations. In most scenarios, however, a managed care plan is a for-profit corporation with responsibilities to stockholders that take precedence over responsibilities to you. The HMO directly and indirectly controls the amount of health care that the doctors in its network are allowed to provide to you.

What's worse is that, if you switch your insurance to a managed care plan and your personal physician isn't in the network, you probably can't continue to go to the same doctor. And, even if he or she is a member, your office visits still may be restricted -- particularly if your doctor is a specialist.

Most managed care plans require you to choose a primary care doctor from their list of doctors. The primary care doctor, also called a gatekeeper, controls your access to medical care. And unless your primary care doctor decides your medical problem is outside his or her own realm of expertise, you will not be able to see a specialist.

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. Managed Care pointed to several similarities between the Codex and what we know today as managed care, including:

- 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 during this time Babylonians could expect treatment not unlike that envisioned by the various versions of the patients bill of rights that are current in the 1990s.

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