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Trends in Managed Care Cost Containment: An Analysis of the Managed Care Backlash

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  • Jerome Dugan

Abstract

Consumer dissatisfaction with the quality and limitations of managed health care led to rapid disenrollment from managed care plans and demands for regulation between 1998 and 2003. Managed care organizations, particularly health maintenance organizations (HMOs), now face quality and coverage mandates that restrict them from using their most aggressive strategies for managing costs. This paper examines the effect of this backlash on managed care's ability to contain costs among short‐term, non‐federal hospitals between 1998 and 2008. The results show that the impact of increased HMO penetration on inpatient costs reversed over the study period, but HMOs were still effective at containing outpatient costs. These findings have important policy implications for understanding the continuing role that HMOs should play in cost containment policy and for understanding how effective the latest wave of cost containment institutions may perform in heavily regulated markets. Copyright © 2014 John Wiley & Sons, Ltd.

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  • Jerome Dugan, 2015. "Trends in Managed Care Cost Containment: An Analysis of the Managed Care Backlash," Health Economics, John Wiley & Sons, Ltd., vol. 24(12), pages 1604-1618, December.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:12:p:1604-1618
    DOI: 10.1002/hec.3115
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    Cited by:

    1. Lukas Kauer, 2017. "Long‐term Effects of Managed Care," Health Economics, John Wiley & Sons, Ltd., vol. 26(10), pages 1210-1223, October.
    2. Randall P. Ellis & Wenjia Zhu, 2016. "Health Plan Type Variations in Spells of Health-Care Treatment," American Journal of Health Economics, University of Chicago Press, vol. 2(4), pages 399-430, Fall.
    3. Kimberley H. Geissler & Benjamin Lubin & Keith M. Marzilli Ericson, 2021. "The association of insurance plan characteristics with physician patient-sharing network structure," International Journal of Health Economics and Management, Springer, vol. 21(2), pages 189-201, June.

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