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sion of the author's view of research priorities and strategies for filling the current gaps in knowledge.


The growth in the 1990s of managed health care has exceeded all previous expectations. Federal policy actively promoted capitated and comprehensive health care for the first time with the passage of the 1973 Health Maintenance Organization (HMO) Act. The growth in HMO enrollment in the 1970s and 1980s was substantial, but HMOs remained a source of health care for a small proportion of Americans (Luft, 1987). During the 1980s new forms of managed care emerged, including the preferred provider organization (PPO). This added to the penetration of managed care and gave it recognition as a significant and growing sector of the health care system.

The failure of health care reform in 1994-1995 did more to accelerate the implementation of managed care than any federal initiative had previously achieved. This should not be surprising. Over the previous 10 years, elements of managed care had been progressively adopted by major payers to control the growth in utilization and costs. These elements include precertification of elective hospital admissions, concurrent review of length of stay or use of per-case payment, substitution of ambulatory surgery and diagnostic testing for inpatient services when appropriate, and other controls including limiting the use of emergency rooms, establishment of drug formularies, and organizational control over the selection of the practitioners included in networks or group practices (Payne, 1987; Weiner and de Lissovoy, 1993). The literature suggests that these actions can individually and collectively reduce health care costs below the levels found in FFS practice and even more so for mental health care (Frank et al., 1995).

The utilization control strategies used in managed medical care have been applied to mental health and substance abuse services (Mechanic et al., 1995). Among an estimated 185.7 million people with private insurance in 1994, 106.6 million were enrolled in plans that offered some form of managed behavioral health care (Iglehart, 1996). One difference, however, is that the tradition of HMO and indemnity insurance coverage for mental illnesses has not been comparable to the coverage for somatic health problems. Historically, the treatment of chronic mental illness has not been covered by HMOs, and indemnity insurance has restricted mental health benefits such that persons with chronic and disabling illnesses would be likely to use services in excess of the available coverage (McFarland, 1994). The reasons for this distinction between mental and somatic illnesses were numerous, including uncertainty that mental illnesses could be cured or medically managed and the role of the states and the public sector as the last provider of mental health services, particularly for persons with severe and persistent mental illnesses (Grob, 1991). Also, significant stigma has been associated with mental illness, which has tended to suppress the demand for ser-

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