Richard Dean Smith, MD

Against the opposition of the American Medical Association, but with support from the Nixon administration, the managed care industry persuaded Congress to require employers with over twenty-five employees to offer their workers managed care insurance coverage as part of the Health Maintenance Organization Act of 1973. Ironically, private business, once an ideological ally of fee-for-service medicine, forced the growth of managed care more than did government. In the 1980s, American business, alarmed by a sluggish economy and continued increases in health insurance costs, brought the matter to greater attention. Private employers became the key force of health system change by shifting their purchasing power to buying health care on a capitated basis from managed care companies.
The per cent of industrial workers in managed care grew from 29% in 1988 to 70% in 1995. Employers had the conviction that enormous savings in health insurance costs were possible in managed care without reducing the quality of care. Prepaid health care plan enrollment in HMOs more than tripled in ten years to an estimated 56 million in 1995, and reported to be 160 million by 1998.
Although very sick persons who had established trust with their doctors did not easily shift to managed care, healthy persons who believed that they would not need much health care were inclined to minimize their spending by selecting the least expensive managed care plan. The movement into managed care and resultant changes in medical practice were more rapid in California than expected or predicted. The demise of the Clinton Health Care Plan in 1993 accelerated the trend towards managed care.
The Knox-Keene Act required all companies with over twenty-five employees to offer a managed care plan whether the company agreed with the tenets of managed care or not. Over one hundred new HMOs appeared yearly, with about that many failing or being assumed by another HMO. The appearance of one managed care company stimulated the rise of others. Mergers gave the impression that the larger managed care companies grew, they became ever richer and more powerful. Managed care companies increased the non-medical services burden, but this increase in costs did not deter their growth and expansion. The arguments for and against managed care nearly became irrelevant as the advance towards managed care gained momentum against regular medical practice following the early adoption of the example of Kaiser Permanente to the exclusion of regular fee-for-service medical practice or other forms of medical financing.
Since the mid-1990s, managed care companies rapidly entered the Latin America market strongly encouraged by the World Bank, the International Monetary Fund, and multinational corporations raising concerns about restricted access for high-risk patients and reduced spending on clinical services under managed care due to the cost of administration and need for investor profits. Co-payments resulted in barriers to care causing increased strain on public hospitals and clinics. Managed care companies attracted healthier patients while those with higher utilization of medical services went to public medical facicilities.
A mass movement directs the hearts and minds of its followers to the future. The self-sacrifice involved in mutual sharing and co-operative action in managed care is impossible without blind hope in future rewards. As long as the existing order functions in an orderly fashion, the masses remain conservative and less willing to change. Undermining existing institutions, familiarizing the masses with the idea of change, and of creating a receptivity to a new idea, can be done only by men who are, first and foremost, recognized speakers or writers.

Contents:
Preface
1. Beginnings

A. Introduction
B. Background
C. Definition of Managed Care
D. Criticism of Physicians

2. Expansion

A. Growth of Managed Care
B. Sanction of Kaiser Permanente
C. Enthusiasm. Contagion.
D. Promise of Exceptional Return-Greed
E. The Consulting Industrial-Complex
F. The Press
G. Rhetoric of Managed Care
H. Fear

3. Enthusiasm

A. Momentum
B. Supportive Data Turn Up
C. Basic Concepts of Managed Care
D. Prevention
E. "Intellectual underpinnings"
F. Contrary Data Ignored, Suppressed
G. Failure to Develop Inherent Value
H. Medical Technology
I. Quality
J. Competition—Folly
K. From Miracle to Myth

4. Finances of the Managed Care Industry

5. Cautions

A. Warnings Ignored, Critics Denounced
B. Role of the Managed Care Industry
C. Regulatory Agencies
D. Movement Feeds on Itself
E. Medical "Inflation"

6. The Bind

A. Captivity
B. Behavior of physicians. Morale
C. Some Legal aspects of managed care
D. Money/Trust

7. Early Warnings

A. Breakdown—Early
B. Kaiser Permanente in the 1990s
C. Emerging Criticism of Managed Care Industry
D. Role/behavior of Patients

8. Late Signs

A. Breakdown—Late
B. Re-capitulation
C. Historical Parallels
D. Collapse
E. Current Cultural Trends
F. Difficulties of Thesis

9. After the Fall

A. Since the Beginning of Managed Care Mass Movement
B. Continuing Problems
C. Rebuilding

Appendix

Glossary of Managed Care Terms