Of the approximately 257.8 million individuals currently living in the United States of America, every one of them has a need for effective, affordable and accessible health care coverage and services. Within the past thirty to forty years, the scope and cost of health care coverage and services has drastically changed, altering the manner in which health care was previously managed.
There are several factors that have affected the cost of health care coverage over the course of the past two to three decades. One of these factors is the introduction and rapidly increasing enrollment in managed health care insurance plans. Managed care health insurance plans can, in most cases, help to alleviate the rising costs of effective medical coverage.
Another important factor that has affected health care costs is the invention and implementation of new medical technologies. As prominent researchers and economic analysts have discovered, there is a distinct and direct correlation between advancing medical technologies and rising health care costs. Medical innovation has been proven time and again to be an important determinant of health care cost growth. It would appear that managed care health insurance plans, which attempt to lower health care costs, and highly expensive new medical innovations and procedures are at cross purposes, pulling against one another in very different directions.
Market-level comparisons have found the cost growth of health care in markets with greater managed care penetration to be generally slower than that of non-managed care health insurance markets. However, managed care is unlikely to prevent the share of gross domestic product spent on health care from rising unless the cost-increasing nature of new medical technologies changes. Managed care health insurance plans differ greatly from indemnity fee-for-service, or FFS, insurance plans. Since the early 1970's, rapidly growing enrollment in managed care health insurance plans has transformed the health insurance market in the United States. Virtually nonexistent in most markets three decades ago, managed care health plans covered 63 percent of the nation's employees by 1994. Managed care incorporates a range of features that allow the insurer greater influence in the process of care delivery. Managed care plans aggressively contract for lower prices from physicians and hospitals and attempt to constrain the use of health care services by monitoring providers and changing provider incentives. Health insurance providers that operate under the fee-for-service concept grant the consumer much more freedom of choice concerning doctors and treatment programs, thus freeing the consumer of any feelings of discontent with "interfering" insurance companies.
Consumers of indemnity plans, however, pay a price for that privilege by way of drastically higher rates and little knowledgeable input on doctors, specialists and nearby hospitals that will fit their particular needs. Many of...