Managed care's condition depends on perspective

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Mike Scott is an account executive for Barker Phillips Jackson's Employee Benefit Division.|ret||ret||tab|

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As insurance rates steadily continue their double-digit increases, a big question is, what happened to managed care? Wasn't it designed to keep costs down while making care more accessible? Wasn't it going to improve benefits?|ret||ret||tab|

The perception of what happened to managed care depends on your perspective. As a consumer, you no doubt liked the impact it had on premiums in the mid-1990s. You grew accustomed to the referral process of HMOs or the limits of PPOs, and felt that almost everything you receive medically should be covered with a co-pay. However, the reemergence of deductible plans is more prevalent even though the cost continues to go up. You probably feel that your benefits have decreased while your cost has increased.|ret||ret||tab|

Managed care did for you individually what was intended it lowered your immediate cost. No one ever saw what was in the future. Many people were pleased with the "new" plans of the mid-1990s, but one of the many unintended consequences was increased usage. |ret||ret||tab|

Insurance companies were entering a new era in health care. They rightfully used financial models to determine costs, but those models were based on past history. Most companies had no idea these plans would change our medical spending patterns. As a result, the increased use of services drove costs higher, consumers demanded more and providers were asked to do so for less money.|ret||ret||tab|

A local orthopedic surgeon told me that the cost of the surgery he was doing in 1998 was not significantly more than in 1990, but the frequency of surgeries almost tripled. Supply and demand at work we have the technology, the doctors and the insurance coverage to pay for it. The question is, were these procedures absolutely necessary, or was there an alternative method that was either less costly or less convenient? That's a decision for the doctor and patient. |ret||ret||tab|

For an employer, managed care did the same as for the consumer. The cost was lower but the benefits better. It was not a tough decision, especially in the tight Ozarks labor market. But later, employers also found that the cost increased, the benefits were reduced and employees were asked to share in more of the premiums. |ret||ret||tab|

Business owners have the same questions, because they are in the same situation as the employees. A 10 percent increase is something no one likes, but the real question is, 10 percent of what? Ten percent of a rate in 1995 resulted in about an $8 to $12 increase per month per employee. Today 10 percent is often between $15 and $30 more per month, per employee. A 10 percent increase for an employee with full family coverage can be $60 to $100 or more per month.|ret||ret||tab|

Now, employers are faced with even tougher questions. What do we do to maintain a good package, while still being able to afford to do business? Managed care has brought about some good changes, but again unintended consequences have driven the rates, employee expectations are high and, unfortunately, businesses do not have the time or ability to prepare for the impending changes. |ret||ret||tab|

For a provider, managed care has brought about increased patient loads and increased revenues, but the cost of providing care has also increased. HMOs required certain access standards to be met, which meant more physicians. More physicians had to see more people per day which required more support in the form of nurses, physician assistants, nurse practitioners and the required technology to track this "new production." |ret||ret||tab|

Then came electronic filing of claims, which was convenient for the provider and the patient, but cost money. As for hospitals, more demands were for outpatient services than inpatient services, so the facilities had to be retooled to this trend. |ret||ret||tab|

CoxHealth and St. John's are doing multimillion-dollar improvements, and the common theme for both is to be more convenient for the patient. Convenience is costly, and managed care has done all it can to hold down those costs. The "easy fruit" has been picked, and now it is up to us individually to determine what we want in the future. |ret||ret||tab|

An April 2002 news release by the American Association of Health Plans estimated that managed care would reduce the cost of health care $182 billion over the next five years. That translates to about $1,600 per policyholder. This same release also pointed out in a PricewaterhouseCoopers Report that mandates, government regulation and litigation increased costs in 2001 alone by $15 billion. Fraud, abuse and other cost drivers account for another $3 billion. If that trend continues, the $182 billion in reduced costs will be nearly cut in half because of these other factors. And none of this accounts for the increase that is inevitable as the cost of doing business goes up.|ret||ret||tab|

The report listed the following factors that drove costs higher in 2001-2002:|ret||ret||tab|

drugs, medical devices, medical advances $15 billion;|ret||ret||tab|

general health care inflation $12 billion;|ret||ret||tab|

rising provider expenses $12 billion;|ret||ret||tab|

government mandates, regulation $10 billion;|ret||ret||tab|

increased consumer demand $10 billion;|ret||ret||tab|

litigation/risk management $5 billion; and|ret||ret||tab|

other $3 billion.|ret||ret||tab|

Do we really need all the conveniences and new medical advances? Do the providers need more money? Do we need more regulation? Generally speaking, all of those have some level of need. |ret||ret||tab|

Springfield's' own regional economy would be significantly different without the medical community. Your family members may be here today because of advances in treatment and or technology. The question is, how do we mange the cost-to-care benefit ratio? |ret||ret||tab|

Every person has a stake in this issue. Make lifestyle changes to improve your quality of life. If you smoke, quit. If you are overweight, lose weight. If your cholesterol is high, work to lower it. If you are stressed out, find an outlet or avoid the stress. These may seem impossible, but they are not out of the question. You can make those changes, if you want to. |ret||ret||tab|

Managed care is alive in the United States its condition simply depends on your perception. We should all do what is right for us individually and "manage our own care" before we can no longer afford to do so.|ret||ret||tab|

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