The changing world of group health insurance

Health insurance is dead; long live health insurance

Upon the death of a king or queen, the proclamation “the king is dead, long live the king” announces a new monarch’s accession to the throne, preserving the sovereign order. As the Patient Protection and Affordable Care Act (ACA) is implemented, it is tempting to proclaim the reign of a new system of health insurance. But, will it preserve the old order or initiate a new form of governance? As states and insurers grapple with new rules and regulations being issued from the Department of Health and Human Services, the Treasury Department and the Department of Labor, one might believe an entirely new health insurance system is being built. Yet, the ACA is designed to preserve existing forms of public and private health insurance, such as Medicare and private employer group health plans, which will continue to operate much as they have in the recent past. What has changed is the role that insurance will play and how that will shape the way we think about health policy.

The impact of private utilization management on psychiatric care: a review of the literature

Psychiatric care in the United States is increasingly practiced subject to some form of utilization management (UM) by third parties. This paper reviews recent studies of UM in the privately insured mental health sector, and finds some limited evidence that UM reduces utilization and costs to the payer. Less is known about UM's effect on mental health outcomes, or its financial impacts on patients, providers, and society. Implications concerning the regulation of UM are discussed, and suggestions are made for future research on the impact of UM.

The effects of health insurance on access to new medical technologies

We examined the use of percutaneous transluminal coronary angioplasty, kidney stone lithotripsy, and bone marrow transplant among patients with different health insurance plans in California. HMO enrollees were less likely to receive these procedures compared with fee-for-service patients. Our results have implications for the inflationary effects of technology under managed care.

View from the bridge: reflections of a recovering staff model HMO psychiatrist

The phenomenon of managed care is misperceived by its critics as a movement. Atheoretical in nature, and driven by spiralling health care costs, it represents the introduction of an executive function into the free-for-all (a supremely ironic term) of American medicine. Part one of this article traces the origin and development of the mental health carve-out, relating it to its antecedents, and describing its 3 overlapping phases: utilization review, discounted fees, and network development and management. Part two describes the key concept of the continuum of care and the role of the case manager in monitoring a care episode. The article concludes by anticipating seven future trends and calling for mental health leadership to recognize and ally with the need to manage resources in a more rational and efficient manner.

Effect of hospital utilization review on medical expenditures in selected diagnostic areas: an exploratory study

Quarterly claims data on 43 insured groups were analyzed through multivariate techniques to explore whether the effects of hospital inpatient utilization review vary across selected broad diagnostic areas. Findings suggest that utilization review was associated with decreases in expenditures of approximately 15 percent for diagnoses within the surgical area, a lesser decrease within the mental health area, and still lesser decrease within the medical area. However, these measurements are imprecise both because of the small numbers and the aggregated diagnoses in each category.

Improved stakeholder management: the key revitalizing the HMO movement?

In summary, our purpose has been to propose and to demonstrate that the survival of HMOs (in whatever form) depends on the proper identification and management of key stakeholder strategies. It is believed that identification and assessment of key stakeholders holds much promise for improving both HMO management and the future performance of HMOs.

GP budget holding in the United Kingdom: learning from American HMOs

A key component of the 1989 British National Health Service White Paper, 'Working for Patients', is the so-called budget holding plan for general practitioners. This controversial proposal calls on GPs to manage their patients' budgets for consultant (specialist) services and hospital care. Most aspects of the scheme, now only contemplated in the U.K., have functioned for years in American health maintenance organisations (HMOs). The thesis of this article is that an analysis of the GP budget holding proposal, in light of the many years of experience with HMOs, will provide valuable insight into how the British innovation might (or might not) function. Moreover, we believe the U.S. HMO experience has a high degree of relevance for the design, implementation and management of budget holding practices in the NHS of the 1990s, as well as other similar proposals being considered across the European continent.

Reducing hospital use and expenditures through utilization review. Findings from an outcome evaluation

Utilization review (UR) has become a prominent approach to cost containment now used by almost 65% of private group insurance plans. Although insurers have increasingly relied on UR to contain health care costs, until recently little was known about the effects of this cost containment approach. This article reviews some of the key findings of a UR evaluation, based on analysis of claims data on 223 insured groups for the years 1984 through 1986. The evaluation found that UR reduced admissions by 12%, inpatient expenditures by 8%, and total expenditures by 6%. It was estimated that UR generated net savings of $115 per employee per year. Groups adopting UR with high baseline rates of hospital use had larger expenditure reductions and greater net savings. It appears that UR can play an important role in private cost containment and help improve medical care resource consumption.

A critique of the Harvard Resource-Based Relative Value Scale

Physician payment reform has assumed a prominent place in the national health policy debate. A key component in this debate is the Harvard Resource-Based Relative Value Scale (RBRVS). The Harvard research effort relied upon several necessary methodologic assumptions and compromises that must be understood to appreciate the RBRVS's strengths and weaknesses. For example, the Harvard group surveyed too few cases to cover the range of clinical practice in a specialty, had too little input in the selection of cases that were judged to be the same or equivalent between specialties, and used an unproven extrapolation methodology to assign final values for total work to non-surveyed physician services. This methodology led to a number of anomalies in the final RBRVS, such as values for comprehensive services for some specialties that were lower for new than for established patients, and total work values for many new patient office services that were lower for Internal Medicine than for Family Practice, a finding inconsistent with empiric evidence. The Harvard RBRVS represents a significant contribution that increases our understanding of physician practice. The system should not be viewed as a finished product. Further investigation and explanation of the assumptions and anomalies are needed to construct a system that reflects adequately the complexity in physician work.

Should we abolish the private health insurance industry?

Health care financing can be based on one of two conflicting principles: health care as a right versus the insurance principle. The former assures equal access to care for all people regardless of income, while the latter requires each grouping in society to pay its own way. In the United States, health financing has utilized both principles, with employer-sponsored group health insurance approximating health care as a right. However, the insurance principle is increasingly eroding this right. In five major areas, the private health insurance industry has serious flaws: it has contributed to health care inflation; it wastes billions in administrative and marketing costs; it is unfair to many groups in society; it has undermined the positive features of health maintenance organization reform; and it has far too much political and economic power. In order to establish health care as a right as the guiding principle of U.S. health care financing, the private health insurance industry and the insurance principle should be abolished.

Continuity and change in preferred provider organizations

This paper presents the results from a national survey of preferred provider organizations (PPOs) that was conducted in 1988. It is based on telephone interviews conducted by the authors with executives in over 170 PPOs in the United States. We compare the survey results with those obtained from similar surveys conducted in 1985 and 1986, allowing us to assess the extent to which PPOs have grown and changed. We found that PPOs have continued to grow at an extremely rapid rate. During the Summer and Fall of 1988, the time in which the survey took place, 37.6 million people were eligible to use PPO benefits, compared to the 16.5 million figure we obtained two years earlier. We did not find, however, that PPOs are moving in the direction of providing more innovative forms of health care cost containment. Most PPOs still rely on discounts from providers and utilization review to achieve savings. There is little trend towards using incentive reimbursement techniques and choosing preferred providers that have shown themselves to be cost-efficient. We conclude that in the coming years PPOs must demonstrate the ability to control rising health care costs. To accomplish this, they will need to put more pressure on providers to use resources more sparingly. Otherwise, they may lose their market share to other forms of managed care.

Access to health insurance in the United States

One of the most compelling issues in United States health policy in the 1980s has been the growing number and proportion of the population with no health care coverage--no private health insurance, no Medicare coverage, no Medicaid coverage, no coverage through any other public or private program. Those without any coverage for health care expenses have come to be known as "the uninsured." The uninsured have increased from 27 million, 13 percent of the total population, in 1977 (Kasper, Walden, and Wilensky n.d.) to 37 million, 16 percent of the population, in 1987 (Short, Monheit, and Beauregard 1988). This article examines the reasons why health insurance coverage is an important issue, those groups most likely to be uninsured, the major sources and types of coverage for the insured population, and public policy options being considered to address the problem of access to health insurance.

Redefining the ambulatory prescription business

As outcomes management becomes more sophisticated and more widespread, the practice of managed care will be altered. Similarly, the ambulatory prescription business will be redefined to fit the needs of this environment. Potentially, the new definition could expand the ambulatory prescription business to encompass responsibility for the outcomes of the drug use process: clinical, quality-of-life, and cost outcomes. A redefinition of the business requires that issues be addressed with respect to accountability and financing.