Managed Care: How Economic Incentive Reforms Went Wrong

In its response to pressures to rationalize health care resource allocation, the American health care system has embraced managed care without concurrent comprehensive health care reform, either in the form of the centralized tax-based systems found in Europe and Canada or that of the Clinton reform plan. What survives is managed care without managed competition, employer mandates, or universal access. Two problems inherent in the incentive structure of managed care plans developed in the absence of comprehensive health care reform work against the public interest. First, sacrifices in terms of medical innovation and quality of care may not be offset by greater equity in the distribution of health care. Second, such managed care plans fail to address the need for long-term accountability.