members to seek care from any provider, in which case they pay deductibles and copayments similar to traditional indemnity insurance.

The early prepaid group- and staff-model managed care organizations (e.g., Group Health Cooperative of Puget Sound, Harvard Pilgrim Health Care, Kaiser-Permanent Health Plan) are nonprofit. The greatest growth in recent years, however, has been among investor-owned for-profit plans, which are mostly independent practice associations or hybrid plans (e.g., Aetna U.S. Healthcare, United Health Care). A few managed care organizations, such as the Los Angeles County Department of Health Services' Community Health Plan and the Contra Costa County (California) Health Plan, are publicly owned and operated by local health departments. In 1994, approximately 31 percent of persons enrolled in managed care organizations were in predominantly staffor group-model organizations, and 69 percent were in network or independent practice association plans (GHAA, 1995).

For-profit managed care organizations are managed somewhat differently from most not-for-profit managed care organizations, and quite differently from publicly operated managed care organizations. Investor-owned managed care organizations are managed to generate profits and increased equity for shareholders. Not-for-profit managed care organizations must reinvest any excess revenue in the organization and provide some type of benefit for plan members. A 1986 IOM report found that not-for-profit health care organizations were more likely than for-profit ones to provide care to uninsured persons and to conduct research and educational activities (IOM, 1986). Publicly operated managed care organizations are usually formed to meet the needs of Medicaid beneficiaries and uninsured residents for whom a local health department has responsibility.

Many managed care organizations have recently formed partnerships or entered into contracts with other community health care providers. For example, several states require or encourage school-based health centers to develop agreements with managed care organizations to improve primary care services for children (Schlitt et al., 1995). Several contractual models for such agreements have been implemented (Zimmerman and Reif, 1995).

Growing Role of Managed Care

Managed care organizations have grown rapidly in the last 10 years; nationwide enrollment in managed care organizations increased from 6 million in 1976 to 51 million in 1994 (GHAA, 1995). These health plans now provide health services to more than 20 percent of all privately insured persons in the United States. In 1994, more than 60 percent of the employed and insured under 65 years of age in 14 major metropolitan areas were enrolled in a managed care organization. As more people become dependent on the services provided only through their health plan, local public health leaders have expressed concerns regarding the effects on the scope, accessibility, and quality of services traditionally provided

The National Academies of Sciences, Engineering, and Medicine
500 Fifth St. N.W. | Washington, D.C. 20001

Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement