Center for Studying Health System Change

Communities Adopt Managed Care to Address Growing Uninsured Problem

News Releases
January 26, 2000

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ASHINGTON, D.C. -- Several U.S. Communities are creating managed care programs to serve the growing population of Americans lacking health insurance, according to a new study (see HSC Issue Brief #25 "Local Innovations Provide Managed Care for the Uninsured") by the Center for Studying Health System Change (HSC). The Study -- which looks at five U.S. communities from Northern New Jersey to Orange County, California -- noted several new managed care initiatives seeking to stretch scarce public and private charity care dollars to simultaneously increase access and manage costs. By increasing access to primary and preventive care, public health officials and providers hope to improve care for the uninsured and minimize use of expensive inpatient and emergency room services.

The managed care coverage being extended is targeted at uninsured Americans who earn too much to qualify for government programs like Medicaid and the Children’s Health Insurance Program, but whose incomes suggest they either cannot afford to purchase health insurance on their own or to make the contribution required for employer-sponsored coverage. Of the approximately 44 million uninsured, about 50 percent are considered low income with annual earnings less than approximately $17,000 for an individual or $34,000 for a family of four.

"With the number of uninsured Americans continuing to increase, there is a growing consensus that the issue needs to be addressed," said Paul Ginsburg, president of HSC. "The managed care model represents one possible way to modestly extend access to primary and preventive care while holding the line on charity care costs."

In this study, HSC looks at evolving managed care initiatives for covering the uninsured in five communities (out of the 12 examined in-depth in the annual HSC Community Tracking Study): Boston, MA; Indianapolis, IN; Lansing, MI; Northern New Jersey; and Orange County, CA. Although the initiatives profiled often resemble Medicaid expansions, they are generally focused in local communities and do not provide the same guaranteed benefits as public insurance.

In these communities, the managed care programs for those without coverage are responses to health system changes such as the movement toward Medicaid managed care, hospital consolidation, deregulation of hospital rates and associated decreases in charity care funding. Safety net providers have been concerned that these market changes would shrink their already limited revenues and inhibit their ability to subsidize care for the uninsured.

"With managed care, increased competition and consolidation putting downward pressure on fees, the funds providers have for charity care are at risk," said study co-author and HSC health researcher Cara Lesser. "Providers and policy makers are looking for new ways to enable them to continue and ideally improve their ability to provide such services within resource constraints. Managed care programs may prove to decrease costs by reducing preventable emergency room visits. However, they may be hard pressed to generate savings hoped for as providers increase access to an array of services that this population previously lacked."

The programs the HSC study describes vary significantly in their scope of services and structure. For example, while the Boston program provides comprehensive inpatient and outpatient services, the Lansing program covers only outpatient services. Additionally, the extent to which the programs manage care varies -- some require pre-authorization for specialty services while others do not.

The Center for Studying Health System Change -- an independent research organization funded exclusively by The Robert Wood Johnson Foundation -- provides objective, timely analyses about changes in the nation’s health care system and their impact on consumers to private and public decision makers. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research, Inc.