managed care managed care the term managed care or managed healthcare is used in the united states to describe a group of activities intended to reduce the cost of providing health care and providing american health insurance while improving the quality of that care ("managed care techniques"). it has become the predominant system of delivering and receiving american health care since its implementation in the early 1980s, and has been largely unaffected by the affordable care act of 2010. ...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admissions and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases. the programs may be provided in a variety of settings, such as health maintenance organizations and preferred provider organizations. health care in the united states government health programs federal employees health benefits program (fehbp) indian health service (ihs) medicaid / state health insurance assistance program (ship) medicare prescription assistance (spap) military health system (mhs) / tricare children's health insurance program (chip) program of all-inclusive care for the elderly (pace) veterans health administration (vha) private health coverage consumer-driven healthcare flexible spending account (fsa) health reimbursement account (hra) health savings account (hsa) high-deductible health plan (hdhp) medical savings account (msa) private fee-for-service (pffs) health insurance in the united states managed care (ccp) exclusive provider organization (epo) health maintenance organization (hmo) preferred provider organization (ppo) medical underwriting health care reform law emergency medical treatment and active labor act (1986) health insurance portability and accountability act (1996) medicare prescription drug, improvement, and modernization act (2003) patient safety and quality improvement act (2005) health information technology for economic and clinical health act (2009) patient protection and affordable care act (2010) state level reform municipal health coverage healthcare in california healthy san francisco healthy way la my health la fair share health care act (maryland) healthy howard (howard co., maryland) the growth of managed care in the u.s. was spurred by the enactment of the health maintenance organization act of 1973. while managed care techniques were pioneered by health maintenance organizations, they are now used by a variety of private health benefit programs. managed care is now nearly ubiquitous in the u.s, but has attracted controversy because it has had mixed results in its overall goal of controlling medical costs. proponents and critics are also sharply divided on managed care's overall impact on u.s. health care delivery, which ranks among the best in terms of quality but among the worst with regard to access, efficiency, and equity in the developed world. history dr. paul starr suggests in his analysis of the american healthcare system (i.e., the social transformation of american medicine) that richard nixon, advised by the "father of health maintenance organizations", dr. paul m. ellwood jr., was the first mainstream political leader to take deliberate steps to change american health care from its longstanding not-for-profit business principles into a for-profit model that would be driven by the insurance industry. in 1973, congress passed the health maintenance organization act, which encouraged rapid growth of health maintenance organizations (hmos), the first form of managed care. early origins before healthcare plans emerged, patients would simply pay for services out of pocket.: 2 in the period between 1910 and 1940, early healthcare plans formed into two models: a capitated plan (essentially an hmo), and a plan which paid service providers, such as the blue cross and blue shield plans.: 2 one of the earliest examples is a 1910 "prepaid group plan" in tacoma, washington for lumber mills.: 2 blue cross (hospital care) and blue shield (professional service) plans began in 1929 with a prepaid plan with baylor hospital, spreading to other hospitals over the next several decades; these plans were largely independent of each other and controlled by statewide hospitals and physicians until the 1970s, when they became nonprofits before being converted into for-profit corporations: 4 such as anthem. 1980s expansion and subdued inflation managed care plans are widely credited with subduing medical cost inflation in the late 1980s by reducing unnecessary hospitalizations, forcing providers to discount their rates, and causing the health care industry to become more efficient and competitive. managed care plans and strategies proliferated and quickly became nearly ubiquitous in the u.s. however, this rapid growth led to a consumer backlash. because many managed care health plans are provided by for-profit companies, their cost-control efforts are driven by the need to generate profits and not providing health care. in a 2004 poll by the kaiser family foundation, a majority of those polled said they believed that managed care decreased the time doctors spend with patients, made it harder for people who are sick to see specialists, and had failed to produce significant health care savings. these public perceptions have been fairly consistent in polling since 1997. in response, close to 900 state laws were passed regulating managed care in the 1990s. the backlash featured vocal critics, including disgruntled patients and consumer-advocacy groups, who argued that managed care plans were controlling costs by denying medically necessary services to patients, even in life-threatening situations, or by providing low-quality care. the volume of criticism led many states to pass laws mandating managed-care standards. meanwhile, insurers responded to public demands and political pressure by beginning to offer other plan options with more comprehensive care networks—according to one analysis, between the years 1970 and 2005, the share of personal health expenditures paid directly out-of-pocket by u.s. consumers fell from about 40 percent to 15 percent. so, although consumers faced rising health insurance premiums over the period, lower out-of-pocket costs likely encouraged consumers to use more health care. data indicating whether this increase in use was due to voluntary or optional service purchases or the sudden access lower-income citizens had to basic healthcare is not available here at this time. 1990s growth and ubiquity by the late 1990s, u.s. per capita healthcare spending began to increase again, peaking around 2002. despite managed care's mandate to control costs, u.s. healthcare expenditures have continued to outstrip the overall national income, rising about 2.4 percentage points faster than the annual gdp since 1970. nevertheless, according to the trade association america's health insurance plans, 90 percent of insured americans are now enrolled in plans with some form of managed care. the national directory of managed care organizations, sixth edition profiles more than 5,000 plans, including new consumer-driven health plans and health savings accounts. in addition, 26 states have contracts with mcos to deliver long-term care for the elderly and individuals with disabilities. the states pay a monthly capitated rate per member to the mcos that provide comprehensive care and accept the risk of managing total costs. techniques