Health Care Costs and Financing

Despite predictions of the end of managed care, enrollment in HM0 plans has stayed relatively constant in recent years

There was a tremendous increase in enrollment in health maintenance organizations (HMOs) in the early 1990s. A decade later, about half of all individuals who had job-related insurance were enrolled in managed care plans. However, in the later part of the 1990s, there was an erosion of trust in managed care that resulted in a so-called "managed care backlash." Many consumers were concerned that managed care did not always provide them with the health care they needed.

Despite this apparent loss of confidence and dire predictions that managed care was coming to an end, enrollments in HMO plans have stayed relatively constant in recent years, according to a recent study. The study was supported in part by the Agency for Healthcare Research and Quality (HS10770) and led by Jose J. Escarce, M.D., Ph.D., of the University of California, Los Angeles.

Dr. Escarce and his colleagues used a database of sources describing HMO market penetration and other characteristics to examine trends in HMO enrollment in all metropolitan communities from 1994 to 2000. They found little retreat from managed care, even in metropolitan statistical areas (MSAs) where choice of leaving was more possible, such as MSAs with a predominance of large businesses, unionized industries, and low unemployment.

HMOs were more likely to maintain their presence in areas with high health care costs and greater managed care experience. Medicare managed care beneficiaries and the privately insured were more likely to exit managed care programs in areas with less experience with managed care prior to the backlash. Medicaid managed care enrollment continued to expand rapidly, even as private sector and Medicare enrollments were stagnant. Dr. Escarce points out that Medicaid beneficiaries may have less of a voice in their care choices. Also, with rising costs and tight budgets, States increasingly are looking for opportunities to contain Medicaid costs, perhaps via managed care plans.

See "The managed care backlash: Did consumers vote with their feet?" by M. Susan Marquis, Ph.D., Jeannette A. Rogowski, Ph.D., and Dr. Escarce, in the Winter 2004 Inquiry 41, pp. 376-390.

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