Managed care is also known as managed healthcare entails the provision of quality healthcare services to the community at a reduced cost. Managed care is a program in the Health System of the United States of America. Its main objective is reducing unnecessary costs incurred by US citizens on healthcare. This objective is achieved through various mechanisms some of which include cost-sharing on services such as surgery, incentives on healthcare providers, provision of medical equipment to healthcare centers, and management of expensive healthcare cases just to mention a few. The reduction of cost for the consumers is of great significance since they can acquire services that they could not afford on their own. Organizations and institutions such as the Health Maintenance Organizations and Preferred Provider Organizations among other non-governmental organizations of goodwill provide the aforementioned mechanisms of healthcare cost reduction. Despite being available and in use by almost all American citizens, managed care has attracted a lot of controversy about the failure of meeting its objective of cost reduction. Critics have argued that despite its establishment, the cost of healthcare services in the United States is still very high. The proponents on the other hand argue that managed care has been a great step towards the improvement of the overall quality of healthcare services in the United States.
The Health Maintenance Organizations became the first institution to provide managed care to the citizens of the United States. This was after the enactment of the HMO Act in 1973. According to the Act, citizens of the US have access to hospitals and physicians at a low subscriber fee. A primary care physician is also known as a ‘gatekeeper’ is normally attached to the HMO members for the first-hand provision of healthcare services. When a member requires special services, they are referred from the primary care physician to a specialist. HMOs are also crucial in the delivery of emergency care services to all its members regardless of the contractual status. The governance of HMOs is at both at the state government and the federal government. These are responsible for the issuance of the certificate of Authority license. It is also important to note that there are different types of HMOs. The difference comes in because of the number of divisions, the operating model, and the level of services offered. As such, there is the staff model in which physicians get to see HMO patients only. In that case, the HMO members directly employ the physicians. In the group model, there is no direct linkage between the HMO members and the physicians. Instead, a contractual group corresponds to both sides.
On the other hand, Preferred Provider Organization (PPO) links with insurance companies to provide quality healthcare services to their members. The PPO plan is different from the HMO because the HMO practices cost-sharing with patients while the PPO does not. Instead, the PPO has a coinsurance feature, which is responsible for the costs of services rendered to their members. In that case, the insurance company is responsible for an agreed percentage of the total cost incurred by their members. For instance, one could have a PPO plan of 70 % in which the insurance company pays for 70% of the total cost of healthcare services rendered to the member patient. Therefore, the patient only pays 30% of the total cost incurred.