Managed Care in Massachusetts

By Bullen, Bruce M. | Public Welfare, Spring 1995 | Go to article overview

Managed Care in Massachusetts


Bullen, Bruce M., Public Welfare


Massachusetts's Medicaid waiver helped move its low-income population from a fee-for-service system to managed care.

In 1991, national health reform leapt into the public consciousness. A national recession and worldwide economic trends resulted in growing numbers of people without health insurance. Those who were insured were concerned about the cost and continued availability of their coverage, whereas the business community and all levels of government shared deep worries about health care inflation rates. Health care reform was hotly debated in the 1992 presidential and congressional campaigns. As the debate progressed, the goals of health reform were generally seen as access to affordable insurance and quality health care "guaranteed" to everyone. In 1994, however, no plan attracted sufficient support to pass in Congress.

In the wake of failure to craft a national solution, the problems remain: Too many people are without health coverage, and health costs continue to increase faster than general inflation. Now, however, the focus of health care reform has shifted to the states.

Some critics of state-by-state reform contend that our health care system is too complex and the problems too massive to be addressed by anything other than a comprehensive, national policy. Yet it is that complexity and magnitude that have made it impossible to achieve consensus on a single proposal for national reform.

It is now up to the states--the "laboratories of democracy"--to lead the way. States have been dealing with health reform issues for some time. More and more states are developing their own reform proposals because they bear much of the burden resulting from more uninsured people and increasing health care costs. The constant among the various state reform efforts, which otherwise vary greatly, has been their reliance on systems of managed care.

"Managed care" is an overworked term, its meaning now encompassing everything from commercial health maintenance organizations (HMOs) to selective provider contracting. At its core, however, is the notion of bringing to bear on providers some externally imposed pressure to counteract the wasteful mindset created by the fee-for-service, third-party-payer system. Although managed care has enormous potential as a tool for improving quality, it has generally been viewed as a means by which to control costs.

State health reform programs generally have been heavily oriented toward existing commercial HMOs. Some states are using such managed-care approaches as primary-care case management and various forms of risk-based reimbursement. Mental health care frequently has been selected for special managed-care treatment. All of these approaches require some sort of "enrollment" of patients with health care providers. This enrollment requirement is, potentially, the Achilles' heel of reform efforts.

Managed Care and Medicaid in Massachusetts

In 1990, Massachusetts faced serious financial problems resulting from, among other things, huge increases in the state's Medicaid budget. Medicaid cost increases were driven by rising caseloads and double-digit inflation in medical costs, compounded by an economic downturn more severe than throughout the rest of the nation. Rather than reduce eligibility or benefits, our solution was to convert our Medicaid fee-for-service program into a managed-care system.

Massachusetts has 656,000 Medicaid recipients--approximately 10 percent of the state's population, which is about the national average. In January 1992, Massachusetts received federal waiver approval to implement a managed-care program called MassHealth Managed Care. Participation was mandatory for most of our Medicaid population. Approximately 170,000 recipients are not in the managed-care program, most of them because they have other health coverage in addition to Medicaid. Those eligible for MassHealth Managed Care must enroll in one of a number of managed-health plans. …

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