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Managed Care and Rising Healthcare Costs

Table of Contents

Introduction
Managed Care
Rising Exposure to Healthcare Cost
Conclusion
References

Introduction

Managed care is meant to help in the provision of quality medical care at affordable costs. Those with individual insurance pay much but get low quality healthcare compared to those with employment plans. This article will discuss how the cost of managed care is rising and how it is affecting many American families.

Managed Care

Managed care is used in healthcare so as to give the best quality of service to patients while controlling the cost. It is a process that comes through supervision, monitoring, giving advice and having appropriate programs that meet the needs of the patients. Managed care concentrate more on prevention of diseases than treatment. Managed care involves early treatment to prevent subsequent visitations to the healthcare. Managed care also work to cover some or all the costs of health services. They do this by collaborating with insurance companies, where some of the money paid by members to insurance companies is used to cover medical costs. They do this by creation of networks where members of the network are required to get healthcare services from this network or from somewhere else (Madison & Foster, 2011).

Managed care also sticks to its budget by providing certain types and amounts of healthcare services. For the plan to work, providers are paid incase a member requires extra healthcare. This is known as fee for service. This way, they discourage members from seeking unnecessary healthcare (Madison & Foster, 2011).

Rising Exposure to Healthcare Cost

The medical costs have been rising over the years. Managed care providers are challenged financially and thus provide only the most necessary services. This has caused managed care to change the source of its resources and the motivation to seek health care. Managed care employees some fee for service to cover the extra cost that a patient incurs incase he/she is in need of extra healthcare. The fee for service method is motivating to healthcare providers but managed care discourages provision of healthcare by only taking the necessary cases; because, it is the only way they can make profit. Managed care providers try their best to prevent their members from getting sick. Fee for service healthcare providers do not mind much about prevention because patients pay for their services (Kane et al., n. d).

Managed care puts together healthcare insurance and service providers. They put fixed fees for the members where limited healthcare service is provided. After taking the fixed amount of money from the members, it is healthcare providers responsibility to know how to make profit with that amount of money. They thus have to restrict their use of funds so as to meet the needs of their customers. Managed care providers must try their best to attract customers by their terms and conditions as well as their costs. The cost can be lowered for each customer or the cost of healthcare services can reduce when people get treated early before progression of a disease. Prevention also reduces chances of members getting into very poor health conditions (Kane et al., n.d.).

For the managed care providers to meet their customers needs, the cost of health insurance has been rising with time. In year 2009, the main health insurance companies made a profit of $14.4 billion which was a 56% increase from 2008. The company had 2.7 million less members in 2009. The estimation of growth in the insurance industry was expected to rise by 7% per year for two years according to KPMGs 2070 Managed Care Industry Report. However, it was expected that health insurance companies will have to face the challenge of the high costs of healthcare if they are to make profits (Klein, 2009).

Increased cost of healthcare will continue to raise the amount of money that people contributes to health insurance. Most of the strategies that have been used in the past have not catered for the medical cost increase. It is estimated that 32 million people are going to have health insurance in four years time and thus increase the amount of finances required to cater for the medical cost. These people will have different health conditions. Other people will not be insured because they will be very healthy while others will be very sick and thus will need health insurance (Klein, 2009).

The only way to meet the extra costs so as to remain profitable is by having the members pay more for their health. This means that members contributions must been increased. This poses a great risk to American families because they must keep up with the increasing cost of health insurance to be able to access quality healthcare. Many who are healthy may opt to leave out health insurance because they cannot spend that amount on fee for service. However, this is a great risk to them if at one time they get seriously ill and not in a position to pay for healthcare. Healthcare providers may also minimize the number of people with many healthcare needs so as to be able to make profits (Anon, 2010).

Managed care has eventually led to many outcomes. They have helped many people to access healthcare and they have also affected how the healthcare providers perform their duties. By using managed care, the providers have been able to control the economy of healthcare and they have mutually benefited the health insurance companies. Control of medical markets by managed care has made them to be widespread in the US making it hard for another method to thrive in the system because they have taken over the medical market (Rodwin, 2010).

Managed care programs have made a lot of profit at the expense of their members. The managed care system has also controlled the market because it has made all its efforts to remove the governments responsibility and thus they have dominated in the sector. Managed care has also discouraged patients to speak out for change. It has also reduced the number of options that healthcare seekers have. Major healthcare insurers have dominated making it harder for American families to have an option (Rodwin, 2010).

Though managed care helps to control the cost of healthcare, doctors are concerned about the loss of autonomy, worsening of relations with patients and reduced quality of care (Deom, Bovier, Agoritas, & Perneger, 2010, p. 7). This is because the payment methods of insurance greatly affect managed care. From 8.5 million people with individual insurance companies, only 34% get excellent services while 54% of those with employer plans access good quality service (Collins, 2006).

Conclusion

Managed care has become a challenge to most of the American families. Most of the available health insurers are either very expensive or fail to meet the needs of the family. Families who have individual market insurance spend a lot of their income on health insurance. Majority of people with employer plans access excellent healthcare compared with people with individual insurance companies.

References

Anon. (2010). Reports Indicates Health Plans Will Have to Find Ways to Maintain Profitability, But Will See Growth. Managed Care Outlook. 23.16, p. 1-10.

Collins, S. R., Kriss, J., Davis, K., Doty, M., & Holmgren, A. (2006). Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families. Web.

Deom, M., Bovier, P. A., Agoritas, T., & Perneger, T. V. (2010). What Doctors think about the impact of managed care tools on quality of care, costs, autonomy, and relations with patients. BMC Health services research. 10, 331-338. From EBSCO host. Print.

Kane, R., Kane, R., Kaye, N., Mollica, R., Riley, T., Saucier, P., et al. (n. d). The Basics of Managed Care. 2011. Web.

Klein. (2009) The Medical Bill You See, The Washington Post. Washington, D.C: Web.

Madison, N., & Foster, N. (2011). What is Managed Care. Web.

Rodwin, M. A. (2010). The metamorphosis of managed care: Implications for Health REFORM INTERNATIONALLY. Journal of Law, Medicine and Ethics.38. 2 , 352-364. From EBSCO host. Print.

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