Advantages & Disadvantages of Managed Health Care

Managed health care was designed primarily to control costs. Managed care creates networks of all health care providers and their patients. Managed care is based on the concept of "capitation," which means that a lump sum is given to all providers in the network relative to the number of members in the managed care plan. The network of all health care providers included in the plan is overseen and monitored by the insurance provider.

Cost Advantages

• Managed care patients are part of a large network that serves to spread the resources, ability and facilities of the network to all the members. As a member, you have guaranteed access to medical care 24 hours a day, seven days a week. Since the managed care provider pays a lump sum per member, the health care per year per member must be rationed given what the initial sum is. Going over that lump sum is generally not permitted, or at least not covered. This means that costs, co-pays and treatment issues are spelled out in advance, and financial planning becomes a real possibility.

Risk Advantages

• To control costs even more tightly, managed care programs often spread the risk in medical care to all providers in the system. This means that medical providers have a built-in incentive to keep their patients as healthy as possible. Since the amount of care one can have in a given year is pre-planned, the patient must take more responsibility for his own health care and lifestyle. Most importantly, however, risk is minimized by the fact that all facilities, professionals and providers under the insurance plan are monitored for competence, ethics, responsibility and results. This means that the doctors in the system are already rated as highly competent. Problems such as cost overages, physician problems and hospital issues are regularly monitored by the insurance company. This means, ideally, that managed care keeps a sharp eye on cost, competence and results.

Choice Disadvantages

• The main problem with managed care systems is the lack of choice. Managed care plans have only a limited number of professionals and hospitals in their system, so switching from a conventional to a managed plan might lead to leaving your doctor. The choices in treatment options are also limited, since the managed care system --- in advance --- says what it will pay for and what it will not cover. This means there is a kind of "routine" built into the system that rejects any innovation or experimental types of care.

Treatment Disadvantages

• The insurance provider managing a plan must be kept apprised of all aspects of your health problems and treatment. You must tell the insurer everything about your health problems regardless of confidentiality issues. Since those hospitals and doctors participating in the plan make a profit the less you are treated, there seems to be a built-in disincentive to spend much time with each patient. If the professionals in the network go over their financial allotment for a given year, that is money and time lost.