History of Managed Health Care

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There are many things to look into when making a health care decision. Some of these include brand name and generic drugs, managed health care, experimental drugs, and orphan drugs. Each of these topics come with their own ethical issues and cultural issues. These factors can make a big impact on a patient’s life. Before making a choice, it is suggested to do research on these issues and topics so the patient can be well informed before making a choice. Disregarding this will result in a choice that may conflict with their ethical and cultural beliefs. With new development and technology as well as constantly changing healthcare laws, these topics are always going to be changing and never remain constant so it is also a good idea for the patient to remain informed continually. Doing this will prevent a patient from making a conflicting choice in the future.


History of Managed Health Care

Managed health care as well as health insurance are created in the 20th century. In which they were not called “insurance” before, but rather “prepaid health care” (“Intro,” n.d., para. 1). It was a way of accessing and paying for healthcare services rather than protecting against financial losses. From its humble beginnings, this set of arrangements is always changing with the occasion of turbulence. From 1910 to the mid- 1940s were the years before World War II. It is where two models have been created providing and paying for health care instead of the patient just paying for the service themselves. The first model was relied on an organization that

was capitated and also provided services directly through its facilities and personnel, resulting in combining the functions of financing and delivery (“Early Years”, n.d., para. 1). What this first model is now called a health maintenance organization or HMO. The second model was the early Blue Cross and Blue Shield plans, which paid for services provided by contracted community doctors and hospitals which also regularly served patients who are not covered by these plans (“Early Years”, n.d., para. 1). In the beginning of 1960, Part A of Medicare was proposed. It was financed through taxes on earned income that was similar to Social Security and was intended to cover mostly hospital services. Later on, Part B of Medicare was installed that is proposed to cover physician and related professional services as well. It was financed through a combination of general revenues and enrollee premiums (“The Onset”, n.d., para. 1). Medicare and Medicaid evolved into benefiting more low-income populations. The combination of Medicare, Medicaid, private insurance, and medical care resulted in the majority of health care being paid for by third-party payers. The third-party payment system is the financial link between the

provider of the service and the patient, however that fostered increases in both the price of services and their utilization (“The Onset”, n.d., para. 2). With health care cost increases, HMO have also been on the same rate because Medicare beneficiaries had option of enrolling in HMOs, which were to be capitated by the Medicare program. The growth of HMOs led to the development of another type of managed care plan: preferred provider organizations or PPO (“The Rise”, n.d., para. 14). People covered under the PPO faced lower cost sharing if they saw a PPO provider rather than a non contracted provider. The difference between HMO and PPO is that PPO benefits did not require authorization from the patient’s primary care physician also known as PCP to access care from specialists or other providers(“The Rise”, n.d., para. 15). While managed care grew rapidly, traditional indemnity health insurance declined changing the U.S healthcare system.

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History of Managed Health Care. (2022, Apr 12). Retrieved June 23, 2024 , from

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