The American Association of Health Plans, which represents managed-care companies, recently issued a report that offers a bracing antidote to the reams of copy devoted to the woes perpetrated by managed care.
The report, authored by Michael Millenson, a consultant with the Chicago office of William M. Mercer, traces the roots of managed care to the not-so-golden era, when autonomous providers were free to do and bill pretty much whatever they chose. It begins by deflating the notion that managed care introduced the snake of economics into the pristine arena of clinical medicine.
In fact, the two always have been intertwined, the report says.
In centuries past, before insurance, "doctors complained bitterly that the sick person made well forgot his gratitude quickly when the time came to pay; medieval surgeons were advised to collect their fee before the operation," the report says.
With the advent of insurance, doctors got the upper hand economically. The report concludes that the result of "unmanaged fee-for-service insurance in conjunction with unrestricted physician autonomy was . . . an economic and quality crisis in American medicine."
As for the much-maligned technique of capitation, managed care didn't invent that either, the report says. Organized medicine, grown fat on fee-for-service, has been fighting prepaid care for a long time, contending it "must be clinically inferior because it costs patients less money," it says.
The report found that "as far back as 1895, the Journal of the American Medical Association warned that a life insurer's plan to reduce doctors' fees for physical exams of would-be policyholders by 40% would result in medical scrutiny "40% less thorough."
It documents several organized attempts beginning in the 1920s by doctors, local medical societies and the American Medical Association to put prepaid doctors and plans out of business.
But in the late 1960s, the excesses caused by the old system's lack of oversight and accountability began to turn the tide. Per-day, per-patient hospital costs climbed 13% annually from 1966 to 1969, the report says.
In 1969 President Nixon said a "massive crisis" in healthcare was imminent, and then Congress passed the Health Maintenance Organization Act of 1973, which authorized federal funds for startup HMOs and smoothed the way for their growth.
The report demonstrates how history repeats itself, often with bizarre twists. For example, fueling the rise of HMOs was a phenomenon the report calls the "fee-for-service backlash," which was a culturally visceral reaction against provider profiteering.