ABSTRACT
The United States is a bastion of the free enterprise system, and Americans can be relied upon to respond appropriately to market signals. For many decades, the market for health care services in the United States has worked differently: The patient and the doctor select the service, and a third party, the insurance company or, in the case of Medicare and Medicaid, the government, pays the bill. With continuing expensive improvements in US medical care, however, for many companies risk management is no longer enough to ensure survival; hence some insurance companies are now trying to reduce medical costs directly, that is, "managing care". By 1994, 65 percent of workers in medium and large companies were covered by managed care plans. In some ways, retail medicine—medicine at the level of a doctor and his patient—is the last cottage industry in America.
