Barbara A. Noah

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During the past decade, the United States health care system has undergone a transformation from a market comprised mainly of self-employed physicians in solo or small group practices to one in which far fewer physicians engage in this type of independent practice. More than three quarters of the physicians in this country now practice medicine within some form of managed care organization ("MCO") or see some managed care patients. "Managed care" is a term used to describe a variety of organizations that control costs and utilization of health care services through techniques such as using physicians as "gatekeepers" for hospitalization and specialists and requiring prepayment by subscribers for services. The rate of patient enrollment in MCOs continues to increase rapidly, with approximately sixty million Americans currently enrolled in health maintenance organizations ("HMOs") and another ninety million in other types of managed care plans. Estimates suggest that if enrollment continues at the current rate, eight out of ten Americans will receive care from some sort of MCO by the year 2000.

Not surprisingly, as growing numbers of patients receive health care services from MCOs, criticisms have proliferated about the quality of care provided by these organizations. In the past few years, HMOs in particular have faced escalating consumer and physician complaints about the effects of cost-cutting on patient care. The public increasingly perceives the care provided through MCOs as inferior to traditional fee-for- service care. Responding to constituent pressures, legislatures in more than twenty states recently have considered bills regulating managed care practices, and Congress has now taken up the issue. Even some employers who offer access to managed care plans as part of their benefits packages have begun to scrutinize HMOs more closely.