Managed Care

This article contrasts three different 'eras' of managed care. In the first era, MCOs appealed to employer/government purchasers primarily because of their potential to deliver broader benefit coverage at a lower cost than traditional insurers. From the mid-1980s to the mid-1990s, spanning the second era, MCOs grew dramatically in numbers and enrollment. It was expected that competition among MCOs and insurers would restrain medical care cost growth. At the end of this era, many large employers began to restrict employee choice to one or two MCOs for the sake of gaining leverage in negotiations. At the beginning of the third era, purchasers and MCOs experienced 'managed care backlash,' fueled by disgruntled employees who were forced into MCOs by employer decisions to eliminate conventional insurance options and were experiencing limitations in provider choice as well as access to some services. In response, employers adopted a strategy of 'managed consumerism,' which sought to shift choice and competition to the provider level. In many respects, the responsibility for managing care was shifted from MCOs to consumers, with MCOs playing a supportive role. In other respects, elements of traditional managed care had been retained, and some had become integral parts of the present health care system overall.