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The Managed Care Backlash
Did Consumers Vote with Their Feet?
Enrollment in HMOs (health maintenance organizations) exploded during the early 1990s, fueled by employers and public policymakers hoping to control rising health care costs. (HMOs typically enforce tight cost controls.) However, by the late 1990s, initial consumer support for managed care had eroded; consumers expressed fear that needed care might be withheld, and many favored tighter government regulation. A RAND Corporation study examined whether consumers “voted with their feet” by leaving their HMO plans.
The table shows trends in HMO enrollments during 1994-1998 versus the “post-backlash” period of 1998-2001.
| Trends in HMO Enrollment Pre- and Post-Backlash (in percentage) | |||||
| All insured | HMO Enrollment | Change | |||
| 1994 | 1998 | 2001 | 1994-1998 | 1998-2001 | |
| 24 | 40 | 39 | 16 | -1 | |
| Privately insured | 31 | 48 | 45 | 17 | -3 |
| Medicare | 10 | 18 | 18 | 8 | <1 |
| Medicaid | 10 | 27 | 37 | 17 | 10 |
| All insured (by region) | |||||
| Northeast | 26 | 48 | 45 | 22 | -3 |
| Midwest | 22 | 32 | 31 | 10 | -1 |
| South | 15 | 30 | 29 | 15 | -1 |
| West | 37 | 53 | 57 | 16 | 4 |
NOTES: 1998-2001 is considered to be the post-backlash period. These results are population weighted. All numbers have been rounded. | |||||
- Overall, for all insured consumers, there was only a 1 percent drop in HMO enrollment during the post-backlash period. There is evidence for two possible explanations:
- Many consumers were more satisfied with their HMOs than had been thought.
- Many HMOs relaxed their cost containment restrictions in order to avoid losing market share.
- Privately insured patients were more likely than others to exit their HMOs.
- Medicare HMO enrollment remained nearly steady; Medicaid enrollment increased significantly.
- HMO enrollment grew even among the privately insured in areas with high health care cost increases.
This fact sheet is based on:
Marquis SM, Rogowski JA, and Escarce JJ, “The Managed Care Backlash: Did Consumers Vote With Their Feet?” Inquiry, Vol. 41, Winter 2004/2005, pp. 376-390.
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RB-9121 (2005)
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