Managed care: practice, pitfalls, and potential

The results of coordinating and changing patterns of health care using managed care activities and organizations are reviewed in this article. Although utilization review and high-cost case management programs reduce the use of expensive services, incentives for providers of care, placing them at risk, are important for managing the intensity of health care. Managed care appears capable of reducing health care costs substantially. However, this increased efficiency has not translated to lower insurance premiums or modulated total health care expenditures because either purchasers are not aware or are not concerned about securing care at the least cost. To correct these deficiencies and deliver the potential of managed care, the author suggests the need to separate insurance into its three components parts (financing, risk spreading, and program management) and developed policies for each.