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
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. …