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The Role of Managed Care in U.S. Healthcare

For a clear understanding of the role of managed care in the United States today, you must first look at the last century. In the 1920s, healthcare started to shift from homes to hospitals; however, health insurance did not become a common employment benefit until World War II. Two decades later, Baby Boomers who tuned into the classic 1960s sitcom The Donna Reed Show watched her pediatrician husband care for patients at his home office. That is rare today.

There have been many milestones in the evolution of healthcare in the United States, and a quality online Master of Business Administration in Healthcare Management program will give students a broad understanding through historical perspective. Only by understanding how history has shaped the attitudes and preferences of healthcare professionals and consumers can professionals shape the future of the industry.

The Rise of Managed Care

Today, the U.S. healthcare system is changing rapidly, and the role of managed care is becoming more important. Back in 1946, state and local medical societies first partnered to offer prepaid physician’s services under the name of Blue Shield . At the time, however, that practice was a small part of the healthcare system. Most people carried health insurance that would cover part of any medical fees.

The creation of Medicare and Medicaid in 1965 gave federal lawmakers and regulators much more control over the healthcare system; those programs today impact millions of Americans. In 1972, however, Congress passed the HMO (health maintenance organization) Act that paved the road for dramatically increasing the role of managed care systems in the U.S. That legislation provided funds for new managed care organizations with the hopes that these HMOs would help control costs.

The Main Types of Managed Care Systems

HMOs represent one important type of managed care system. They directly employ physicians and other healthcare professionals, and generally, policyholders receive their care only through the HMO.

Preferred provider organizations (PPO) are the other major system that has developed in recent decades through the evolution of healthcare providers. Medical professionals sign on with a PPO to provide services by set fee schedules, but they are not full-time employees of the PPO itself.

The Affordable Care Act in 2010 more deeply involved the government in the evolution of healthcare. The ACA defines required coverage and creates subsidies and taxes, and since its passage, private insurers have had to keep up with all the changes in the healthcare marketplace.

Healthcare in the United States is changing at a faster pace than ever before, which has put a spotlight on the role of managed care and the business professionals who lead the industry.

Learn more about the UT Tyler online MBA with a Concentration in Healthcare Management program.


American Academy of Pediatrics: Types of Managed Care Plans

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