The Evolving Role of Managed Care

The United States spends a larger percentage of GDP on healthcare than any other developed nation, but scores on the lower end of all quality and effectiveness indicators. This leads to a national dialogue on how to promote and innovate healthcare while doing it in a most efficient manner, both resource and financial distribution, possible. Managed care are health insurance and financing plans which attempt to lower health care costs through a wide variety of mechanisms such as reducing unnecessary testing, beneficiary cost sharing, service optimization, selective contracting of providers, and improving patient admissions and lengths of stay. Medicaid has numerous long-term managed care plans.

The role of managed care is beginning to expand in scope. While traditional plans include a fee-per-service model, emphasizing billing based on disease and rarely covering serious illnesses, managed care focuses on a wellness perspective. Managed care directs resources to disease prevention through wide coverage of regular checkups and treating illnesses at early stages. Numerous managed care organizations have emerged, with specialists and facilities offering such services at minimum monthly fees (Shrank, Keyser, & Lovelace, 2018).

The primary method of cutting costs through managed care is the reallocation of resources from medical to social services. Managed care has a more engaged delivery system along with the better trust of the population. Such providers have the incentive and unique position to offer and measure the effect of a blend for medical and social services with the hopes of achieving positive outcomes. This redistribution of resources remains uncertain, but a likely partnership between managed care organizations and the government at all levels will have an impact on improving the health of populations and offsetting long-term treatment costs. In turn, these resources can be redirected to providing health services to groups not covered by managed care plans (Shrank et al., 2018).

One of the leading arguments against managed care is that without financial incentive and market competition, the socially-based system will decline in quality. However, there is still competition in terms of network composition (participating physicians, specialists, and facilities), quality of care, and some government financing. In addition, the engagement and passion of these organizations are often beneficial in increasing quality, despite sometimes lacking the resources or trained staff to fulfill objectives.

For example, the state of California has one of the largest managed care programs under Medicaid. Based on the Healthcare Effectiveness Data, managed care beneficiaries score consistently higher rather than private plans. However, there is an issue of limited access to care as small networks are currently unable to cope with patient loads and needs that are enrolled in the state Medicaid program (Bindman, 2018).

Managed care is becoming more complex as it expands, focusing on specific populations and components of care. Under the Affordable Care Act, new provisions were added to Medicaid and other federal regulations to assess, develop, and maintain a level of quality to managed care services offered as well as offering quality strategies (Shrank et al., 2018). A regulatory backlash beginning with the early 2000s led to significant increases in managed care quality. This particularly due to policymakers utilizing reimbursement systems for medical organizations and personnel to meet specific criteria regarding cost, quality, and patient satisfaction benchmarks. Regulations serve as the primary mechanism of controlling the quality of managed care with improvements in both access and patient outcomes over the long-term (Highfill, 2017).


Bindman, A. (2018). Redesigning Medicaid managed care. JAMA 319(15), 1537-1538. Web.

Highfill, T. C. (2017). Patient outcomes and managed care: What was the impact of the state regulatory backlash? Web.

Shrank, W. H., Keyser, D. J., & Lovelace, J. G. (2018). Redistributing investment in health and social services—The evolving role of managed care. JAMA, 320(21), 2197-2198. Web.

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