History of Health Insurance and Managed Care

History of Health Insurance and Managed Care

History of Health Insurance and Managed Care 150 150 Peter

The History of Health Insurance and Managed Care

Examine the main events in the history of health insurance from the mid-twentieth century to the present. Explain how these events led up to the evolution of managed care organizations.
Evaluate the purpose of health care insurance in the early days.
Evaluate the evolution of health insurance and managed care. What is the relationship between the two and how has managed care risen to prominence in today’s health care market?
Explain how the perspective of health insurance has or hasn’t changed in today’s managed care environment.
Analyze the public policy and market forces leading to the growth of managed care.
Analyze the current trends in managed care and its future in the context of health care reforms.

Sample Paper

Main Events in the History of Health Insurance from the Mid-Twentieth Century to the Present and How They Led Up to the Evolution of Managed Care Organizations

            Managed care was influenced mainly by new medical technology and the Employee Retirement Income Security Act enacted in 1974 (ERISA), which led to a rapid increase in premiums by insurers and Medicare. ERISA is a federal law that sets minimum standards for voluntary health and retirement plans in the private industry (United States Department of Labor, n.d). The enactment of ERISA was influenced by a major historical event that involved the closing of star Studebaker Corporation leaving an underfunded pension plan. ERISA led to a quiet revolution in the industry by promoting the entry of new providers. Congress changed payment by implementing a fixed price that was based on patient diagnosis. Private insurance changed by developing new prepaid group practices such as HMOs, PPOs, and POS. Other events include earlier events.

Relationship between Health Insurance and Managed Care and How Managed Care Has Risen to Prominence in Today’s Health Care Market

            Managed care is a type of health insurance where contracts are made with health care facilities and providers to provide care at a reduced cost. Reimbursement depends on the rules of the network. Managed care stemmed from the inefficiencies of traditional health insurance that was characterized by high health care costs. Managed care has risen to prominence in the current health market due to the continued desire to control health care costs and the effects of managed care on health outcomes (Heaton & Tadi, 2021). Healthcare focus has shifted to quality, safe, and cost-effective care.

How the Perspective of Health Insurance Has or Hasn’t Changed in Today’s Managed Care Environment

            The initial purpose of health care insurance was to cover only the major health problems and had no influence on treatment plans. This has changed with managed care environment, which has focused on cost-effectiveness, quality and safety of care, increased access to care, and other issues. The current perspective of health insurance has expanded to include care management and prevention. The perspective of health insurance has also changed as the initial focus was on covering medical costs. The current focus has expanded with managed care as reimbursement is used as an incentive to promote certain standards in healthcare (Heaton & Tadi, 2021). Managed care environment has shifted the priorities and focus in health care.

Public Policy and Market Forces Leading to the Growth of Managed Care

            The Health Maintenance Organization Act of 1973, which is the main amendment of the Public Health Service Act of 1944, is the major contributor to the growth of managed care. The amendment established the foundation for the establishment of managed care organizations by providing an alternative medical practice to the traditional fee-for-service (Heaton & Tadi, 2021). The Affordable Care Act also contributed to the growth of managed care. Market forces include factors such as technology which increases premiums. Managed care was developed as a response to spiraling health care costs. It functions as a tool to manage cost-effectiveness in the health care industry. Increased health care costs are linked to new technology in healthcare.

Current Trends in Managed Care and It’s Future in The Context of Health Care Reforms

            One of the trends in the increasing growth of managed care is the changing demands and priorities in healthcare, including the desire to improve quality and safety while reducing healthcare costs. The need for cost control in healthcare increases the demand for managed care. Other trends include the expansion in usage of managed care by the public-sector population. The endorsement of managed care by healthcare stakeholders shows the potential for managed care to have a significant impact on healthcare reforms. This is due to their ability to influence outcomes. According to Heaton and Tadi (2021), provider reimbursement affects healthcare utilization. This means that with the provision of financial incentives to the providers, there are more likely to follow the intended objectives and goals of the managed care plans.



Heaton, J., & Tadi, P. (2021). Managed Care Organization. Start Pearls Publishing LLC. https://www.ncbi.nlm.nih.gov/books/NBK557797/

United States Department of Labor. (n.d). ERISA.