Analysts Question Value of Managed Care

Article excerpt

By Milt Freudenheim

N.Y. Times News Service

Trying to slow the rise in health care costs, American employers spent some $13 billion last year for managed care services. But national spending on health continued to grow at doublegit rates, leading some experts to question the effectiveness of managed care.

Managed care typically includes a review of each case before agreeing to pay for treatment. The payers often also encourage patients to use networks of hospitals and doctors to meet costnd qualitylated standards of care, often at discounts.

Many health care proposals in Congress and state legislatures rely heavily on managed care for cost control. But the Congressional Budget Office discouraged hopes for savings in a recent report to the House and Senate taxiting panels.

"The growth of managed care does not appear to have affected systemwide costs," the Budget Office said in a staff memorandum to Congress. "Based on existing knowledge, it cannot be assumed that further growth of managed care would reduce either the level or the rate of increase of systemwide healthcare spending," although it added that "reliable evidence on the effectiveness of managed care is relatively sparse."

National spending on personal health care grew by 10.7 percent, to $282 billion, last year.

Some companies report that managed care has helped slow the rise in their health costs. But hospitals and doctors often order more tests and procedures and raise fees to patients not under managed care.

The largest savings have shown up at health maintenance organizations in which doctors work on salary or in a group practice, the Budget Office added. It suggested that overall spending might be reduced by 10 percent in the unlikely event that everyone with health insurance joined this type of HMO.

About 39 million people are enrolled in HMOs, of which 15 million are in staff and group models. Fifty million more are eligible to use discount networks.

Gary Yeaw, group insurance director at Alliedgnal Inc., which spent $400 million in 1991 on employee and retiree heatlh care, said staff model HMOs had yielded much better results than more loosely organized medical networks.

He said health costs for 48,000 Alliedgnal employees in all types of HMOs had increased 10 percent to 11 percent annually since the company made a strong commitment to managed care six years ago, compared with increases of 20 percent a year for 22,000 employees under traditional coverage. …