Question

Explain managed care and its impact on consumer-driven health care.

Answer 1

Managed care plans are a type of health insurance. The term "managed care" or "managed healthcare" is used in the United States to describe a group of activities intended to reduce the cost of providing for profit health care while improving the quality of that care ("managed care techniques"). They have contracts with health care providers and medical facilities to provide care for members at reduced costs. It has become the essentially exclusive system of delivering and receiving American health care since its implementation in the early 1980s, and has been largely unaffected by the Affordable Care Act of 2010.

There are three types of managed care plans:

• Health Maintenance Organizations (HMO) usually only pay for care within the network. You choose a primary care doctor who coordinates most of your care.
• Preferred Provider Organizations (PPO) usually pay more if you get care within the network. They still pay part of the cost if you go outside the network.
• Point of Service (POS) plans let you choose between an HMO or a PPO each time you need care.

Consumer-driven health plans (CDHPs) have moved beyond the concept stage and are now health benefit options available to employees in many large companies. CDHC, refers to third-tier health insurance plans that allow members to use health savings accounts (HSAs), Health Reimbursement Accounts (HRAs), or similar medical payment products to pay routine healthcare expenses directly, but a high-deductible health plan protects them from catastrophic medical expenses. CDHPs are often compared to medical savings accounts (MSA). MSAs first became available in the mid-1980s; they were later regulated by the 1996 Health Insurance Portability and Accountability Act (HIPAA) as a tax exempt health insurance product offered primarily to employers with 50 or fewer workers and individuals in Medicare. High-deductible policies cost less, but the user pays medical claims using a prefunded spending account, often with a special debit card provided by a bank or insurance plan.

If the balance on this account runs out, the user pays claims just like under a regular deductible. Users keep any unused balance or "rollover" at the end of the year to increase future balances or to invest for future expenses. CDHC plans are subject to the provisions of the Affordable Care Act, which mandates that routine or health maintenance claims must be covered, with no cost-sharing (copays, co-insurance, or deductibles) to the patient.

This system is referred to as "consumer-driven healthcare" because claims are paid using a consumer-controlled account versus a fixed health insurance benefit. That gives patients greater control over their own health budgets.