Group benefit financing and managed care: linking the rewards of risk taking to funding methods

The marriage of the delivery and insurance mechanisms is key to the managed care, preferred provider concept, for it holds potential for cost-effective optimization of delivery and marketing efforts. It is, however, necessary to understand each component of the marriage, if the benefits are to be enjoyed. This article explores the five major benefit plan financing arrangements in use today and examines their implications for risk-reward sharing arrangements in a managed care environment.