A Foundation Perspective
Core Principles for Regulating
Health Care Quality
Karen Davis and David Sandman
For Americans with health insurance, the system they confront today is dramatically different from that of just a few years ago. Coverage of working families has rapidly shifted to managed care. Among employees of firms with two hundred or more workers, 81 percent belonged to a managed care plan in 1997 compared with just 29 percent in 1988. 1 Similarly rapid growth in managed care enrollment has occurred in the Medicaid program; almost half— 48 percent—of all Medicaid beneficiaries belonged to a managed care plan by 1997. 2 Some 14 percent of Medicare beneficiaries were enrolled in managed care in that same year, and further growth is expected. 3 At the same time, the number of Americans without any health insurance is also steadily growing.
As managed care has grown, it has raised new concerns about the quality of health care being delivered. Under a fee-for-service system, people worried that unnecessary diagnostic tests and medical services were being ordered for patients and that the nation's health care costs were out of control. Overutilization of services and inappropriate use of health care resources were viewed as the primary problem. Not surprisingly, managed care's financial incentives have the opposite effect. Now the public and policymakers