ABSTRACT
Over the past thirty years there has been a series of attempts to create market dynamics in healthcare to address factors driving healthcare inflation which stands at 2–3X the rate of the US economy. The aging population, the pace of advancements in new drug discovery, the consolidation of delivery system competition, and health consumerism all contribute to US trends in unit cost and utilization (National Academies Press, 2008). There have been numerous regulatory and market forces driving re-alignment of the US reimbursement system. The market has responded to medical insurance premium increases with the introduction of managed care products designed to integrate care-management models and provider-network-contracting models. These strategies put downward pressure on utilization and unit cost to bend the cost curve and create competitive pricing. These managed care tactics have proven to be effective and led Centers for Medicare and Medicaid Services (CMS) and state Medicaid systems to shift their populations to these private alternatives as a way to off-load this risk from public balance sheets.
