Reorganization of the health care system was a strategy that came into favor in the early 1970s. Those who espoused this strategy believed that the problem with the health care system originated with faulty incentives that market forces could correct. As such, the structured competition that result from reorganization should allow the health care market to right itself, thereby lowering costs and improving the quality of care. There are three major factors that help explain the appeal of reorganization in the early 1970s to transform the US health care system. The first factor was a financial one, encompassing both the realization that health care spending was increasing unsustainably and the contextual economic crisis during the time the reorganization
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The way managed care strategies, especially ‘health maintenance organizations’ (HMOs), were theoretically conceptualized appealed to all of those principles. Simply shifting the incentives of the over-arching health care system would allow the government to “merely [act] as a catalyst” (p. 207). The resulting ‘self-regulating system’ would not only be cost-effective, but would result in improved outcomes for patients served by an HMO. Another critical element was that participation in an HMO would be voluntary; it wouldn’t impinge an individual’s rights because it wouldn’t be mandatory. And, perhaps above all, it wouldn’t require government intervention in the way that prices are set. Reorganization strategies focused on volume and quality and wouldn’t dare enter into the ‘un-American’ practice of controlling prices and disrupting the free market. Reorganization managed care strategies were also attractive to the “pro-competitive” (Tuohy, p. 72) and pro-business principles of the US. The reforms “based on market principles rather than a profession-state accommodation” (p. 71) planned to incorporate large private entities that were part of the both the supply and demand side of the health care …show more content…
The strategy came unraveled nearly from the outset – after the discrepancies between reorganization in theory and practice were recognized – and the legislation that passed in 1973 barely satisfied any of the myriad stakeholders. Nevertheless, reorganization and market solutions still hold the attention of many policy makers. Despite its anticlimactic entrance in the 70s, reorganization was prominently featured in President Bill Clinton’s failed plan for health care reform and even has a role in the Affordable Care Act. Now, there are doubts about whether or not highly successful models of managed care of competition can be
The way managed care strategies, especially ‘health maintenance organizations’ (HMOs), were theoretically conceptualized appealed to all of those principles. Simply shifting the incentives of the over-arching health care system would allow the government to “merely [act] as a catalyst” (p. 207). The resulting ‘self-regulating system’ would not only be cost-effective, but would result in improved outcomes for patients served by an HMO. Another critical element was that participation in an HMO would be voluntary; it wouldn’t impinge an individual’s rights because it wouldn’t be mandatory. And, perhaps above all, it wouldn’t require government intervention in the way that prices are set. Reorganization strategies focused on volume and quality and wouldn’t dare enter into the ‘un-American’ practice of controlling prices and disrupting the free market. Reorganization managed care strategies were also attractive to the “pro-competitive” (Tuohy, p. 72) and pro-business principles of the US. The reforms “based on market principles rather than a profession-state accommodation” (p. 71) planned to incorporate large private entities that were part of the both the supply and demand side of the health care …show more content…
The strategy came unraveled nearly from the outset – after the discrepancies between reorganization in theory and practice were recognized – and the legislation that passed in 1973 barely satisfied any of the myriad stakeholders. Nevertheless, reorganization and market solutions still hold the attention of many policy makers. Despite its anticlimactic entrance in the 70s, reorganization was prominently featured in President Bill Clinton’s failed plan for health care reform and even has a role in the Affordable Care Act. Now, there are doubts about whether or not highly successful models of managed care of competition can be