Summary

Although some "managed care" plans have the potential for delivering health care at lower cost, little empirical evidence exists showing that the use of these plans has contained employers' overall health care costs. Managed care refers to insurance plans that limit patients to a specific network of doctors and hospitals, control the use of services, and negotiate reimbursement with providers. Under this definition, about half of all insured workers are covered by managed care plans. GAO reviewed employers' experience with managed care and found that some managed care plans, by negotiating physician and hospital payments and controlling the use of services, can potentially hold down costs. Lower costs for these plans, however, may not translate into lower health care spending for employers due to enrollee differences and pricing policies. GAO also discovered that employees like many features of managed care plans but would rather not be limited in their choice of physicians.