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Show Any Willing Provider: An Unacceptable Risk for a Marginal Gain Samuel Sutton ing more people into the uninsured category and further raising the overhead costs for American businesses. With so many Americans lacking coverage already and health costs constantly rising faster than median incomes, we simply cannot afford to risk undermining MCOs, which have proven themselves to be one of the few solutions to date that have been able to reliably curb rising prices. AWP may solve some minor healthcare problems, but unfortunately it runs an unacceptable risk of making the bigger ones even worse - something that America simply cannot afford. History and Impact of the MGO Industry The National Center for Health Statistics (NCHS) defines managed care as "...where care is provided under a fixed budget and costs and [is] therein capable of being 'managed'" (NCHS, 2004b). The managed care movement in the United States can trace its roots back more than 50 years, but it did not have much impact until the early-to-mid 1970s. Healthcare costs had begun to rise faster than the economy could keep up with, so Congress, with the help of the Nixon Administration, passed the Health Maintenance Organization Assistance Act in 1973. The Act provided a host of economic incentives and advantages to the MCO industry, thereby thrusting it to the forefront of the American healthcare system. Despite the fact that many of the economic advantages set forth in the Act have since expired, MCOs have had a visible impact on the market ever since. Today, it is estimated that roughly 80% of those Americans who get health coverage through their employer are covered by such a system (Carroll, 2002, p. 927). They have become especially popular among business owners because they usually offer lower premiums than most other health insurance providers. Overall, MCOs are now responsible for providing healthcare or health insurance to roughly half of the American population (By the numbers, 2004, p.l). There is much evidence that these MCOs have been at least somewhat effective in holding down the cost of healthcare in America. During much of the 1990s, when MCOs became truly significant players in the market, the rate of healthcare cost increases slowed to the lowest levels in decades, increasing by only 4.8% in 1997 (American Association of Health Plans, 1999, p.l). Research has also indicated that a ten percent increase in the market share of HMOs is attributable to a 6.6% decrease in insurance premiums (AAHP, p.l). In addition, the Congressional Budget Office estimated, in a 1995 report, that if 70% of the population had been enrolled in "effective HMOs" in 1990, national health costs would have actually fallen by 8.3%. Several other studies have found that states which have a relatively higher percentage of their population enrolled in MCOs experience lower rates of increase in their overall healthcare costs than states that have relatively fewer enrolled in managed care (Sheils, Stapleton and Haught, 1995, p. vi). Table 1 illustrates the average annual rate of increase in personal health expenditures in the United States and Table 2 illustrates total national membership in MCOs. Table 1 Growth in personal healthcare expenditures - average annual percent increase Year Percent Increase 1960-65 8.2 1965-70 12.7 1970-75 12.3 1975-80 13.7 1980-85 11.7 1985-86 8.7 1986-87 9.6 1987-88 11.3 1988-89 10.6 1989-90 11.7 1990-91 10.3 1991-92 8.5 1992-93 6.4 1993-94 5.2 1994-95 6 1995-96 5.2 1996-97 5.3 1997-98 5.3 1998-99 5.5 1999-2000 6.6 2000-01 8.7 2001-02 8.7 2002-03 7.3 Source: National Center for Health Statistics (NCHS, 2004a). Note: these figures are for personal health expenditures, not insurance premiums. However, national trends on health insurance premiums follow a similar pattern, with the lowest rates of increase occurring during the mid-to-late 1990s, followed by an increase after 2000. The data on personal expenditures was used because they were more expansive and more readily available from a reliable governmental agency. 74 |