Taking it slowly with managed care - Invited address in a workshop on Managed Care for Mental Health: International Experiences and the New Zealand Direction, Schizophrenia Fellowship National Conference, Christchurch. September 5-7. 1997

Abstract

Managed care arose from a need to contain the escalating health costs of the insurance and litigation based US health system, which were rising at rates of more than 10% a year through the early 1990S. It is described as the application of market forces to health. It is an insurance based system in which health management organisations (HMOs) provide cover for illness through a range of preferred providers who discount their services partly on the basis of restricting the options for care relating to particular illness groups. The heart of the managed care system is the utilization review in which the cost-effectiveness of the options for care are analysed, resulting in the more wasteful options being eliminated.

Utilization review studies have found as much as a quarter to a third of all medical services performed are of little or no benefit to patients. Utilization reviews have also shifted the emphasis of care towards preventative approaches. While managed care initially resulted in increases to the cost of health care it began to be very effective in 1994 (only a 6.5% increase in national costs) with managed care group health care costs falling by 1.1% and remaining flat in 1995. A recent newspaper report describes the "inexplicable" buoyancy of the US economy, with one commentator saying that the reduction in health care insurance costs was a major contributor. A majority of US citizens have their health insurance paid by their employer, and about half the US population (135 million people) is enrolled in a managed care system. The US government expects to save $250 billion through the implementation of managed care.