ABSTRACT
New forms of managed care organizations, including accountable care organizations (ACOs) and patient-centered medical homes (PCMHs), are expected to provide better coordination of care than our current system of fractionated individual practitioners. As employers faced increasingly more expensive health insurance premiums in the 1980s and 1990s, they turned to managed care to help mitigate the overtreatment incentives built into the traditional fee-for-service (FFS) system. Managed care plans are health insurance plans that provide care through contracted healthcare providers who provide services at reduced rates. Managed care organizations clearly face higher costs in states that adopt these consumer protection and provider protection measures, and these additional costs will lead to higher premiums. Econometric analyses indicate that managed care can reduce expenditures. The initial impact was blunted by the "managed care backlash," but managed care organizations are currently producing better results.
