Homework Question on Managed Care
- Describe managed care as a component of the U.S. health care system and its impact on health care spending from the perspective of the Affordable Care Act.
- Explain why rising exposure to health care costs is threatening the well-being of American families.
- Explain your personal perception of the future of managed care from a leadership perspective focusing on key issues related to health care costs/spending.
Homework Answer on Managed Care
Managed care as a component of the U.S. health care system and its impact
Since doctors and patients have extensive flexibility to choose the treatment intensity, the market of insurance experiences moral risk unless insurers supervise treatment selections or use financial inducements for insurers to economize on care. Long before 1980s, numerous United States health insurance was conventional including every Medicaid and Medicare whereby insurer reimbursed hospitals and physicians for every procedure carried out using copayments and deductibles to provide inducements against unlimited expenditure, however, they never intervened in doctor treatment choices.
As a result, a managed care, an alternative arrangement was introduced that engages insurers directly to contract with or even to employ physicians and regulate their selection of care either through the risk of termination or through more complex financial incentives, if the insurer believes that the doctor uses health resources more than what is clinically required (Cutler, & Reber, 1998).
The Health Maintenance Organization (HMO) is one of the most restrictive types of managed care that either employs the doctors whose care forms or reimburses special contracts with a doctor’s panel restricting its patients to visit other doctors in most circumstances. The present extensive and less restrictive managed care version is what is known as a Preferred Provider Organization (PPO) that contracts with a network of doctors to obtain discounts on their bill in return for the PPO offering a discount to its patients to have an appointment with the networked physicians.