Is the managed-care model no longer capable of limiting health-care inflation?
It’s not the model. The model has value. The problem is that managed care is really on the ropes. Consumers don’t like it. The politicians don’t like it. And the employers are now finding they’re not saving as much as they’d hoped. Consequently, many employers are moving from strict managed-care plans to PPOs [preferred provider organizations] and modified fee-for-service plans. During good economic times, when profits are flowing and you have a labor shortage, employers don’t care much about squeezing the last nickel and dime out of their health-care budgets. The question now is, with this downturn and with premiums going up, will employers want tougher managed-care plans, and how will managed- care companies respond? If they all just offer PPOs and modified fee- for-service plans, nothing will happen. But if some companies come back to employers, now seeing double-digit increases in insurance premiums, and say “we really do think we can do a better job at managing costs, but you the
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