Managed Health Care:

Effect on Employers' Costs Difficult to Measure

T-HEHS-94-91: Published: Feb 2, 1994. Publicly Released: Feb 2, 1994.

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GAO discussed managed health care and its effect on employers' health care costs. GAO noted that: (1) certain managed care plans' potential for providing care at lower cost depends on the plans' controls on price and the use of services and the incentives for consumers and physicians; (2) group and staff health maintenance organizations (HMO) have the most potential for cost savings; (3) the effect of managed care on employers' health care costs is difficult to measure; (4) although some employers' overall health care costs have initially decreased under managed care plans, their health care costs will likely increase in subsequent years; (5) the major problem with managed care concerns the limited choice of physicians and services; (6) employers are offering newer types of managed care plans that are more flexible but have less cost-saving potential to gain employees' acceptance; (7) patients rate managed care plans lower than indemnity plans in quality of physician care; (8) more than half of managed care enrollees are in preferred provider and point-of-service plans; and (9) employers are adding quality monitoring to their managed care efforts to improve their ability to assess health care plans and providers.

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