Private Payers Serving Individuals with Disabilities and Chronic Conditions. B. Background


Although estimates vary depending on how disability is defined, roughly 14 percent of adults between the ages of 18 and 65 experience a disability that limits their functional activities (Adler, 1995). Estimates of the percentage American children having special health care needs due to chronic illness or functional limitations vary widely, from 7 percent (Adler, 1995) to nearly 31 percent (Harris-Wehling and Ireys, 1995). Children and adults under the age of 65 constitute about 60 percent of the population of Americans with disabilities (Adler, 1995).

Chronically ill and disabled individuals often require a broad range of health and social services to maximize functional well-being, improve health status and avoid institutionalization. The range of services needed varies depending on the physical or cognitive condition that causes the disability. These specialized needs are often met through multiple programs that have different funding sources and routes to eligibility. As a result, the system from which people with disabilities receive health and social support services is often fragmented.

Managed care health plans cover about 48 percent of disabled people in the U.S. (Fama, Fox, and White, 1994). Policymakers and researchers have argued both that the net effect of managed health care on people with disabilities is positive and that it is negative.

On the positive side, managed care models have been proposed as one way to improve the efficiency and effectiveness of health care services delivered to individuals with disabilities (Batten and Bachman, 1994). They rely on the gatekeeping role of a primary health care professional as the key to regulating costs and ensuring access to coordinated care. Because services delivered through managed care have the potential to be more efficient and of equal or higher quality than traditional fee-for-service medicine, it also holds the potential to improve health services delivery and financing for people with disabilities. Health outcomes for a disabled individual may improve if all services and supports are provided through a single case manager.

On the negative side, the usefulness of managed care models in providing services to people with disabilities has been questioned because these individuals have complex needs for health care and social support--needs that may not be met in a financing and delivery model which has strong financial incentives to reduce costs (Luft, 1991). This concern is particularly important for the increasing number of state Medicaid programs which are turning to managed care in order to control expenditures and increase quality of care for disabled populations.

Private and public payers have implemented many changes in service delivery and financing changes based on a broad range of managed care models. Despite the growing interest of public and private payers in expanding managed care enrollment to include chronically ill people, there are little data available on their needs or experiences in either public or private managed care plans. At a time of rapidly rising enrollment of Medicaid and Medicare enrollees in managed care, federal and state policymakers must learn more about the impact of managed care on chronically ill individuals in order to make informed public policy decisions.

Although about half of disabled individuals are covered by managed care plans in the United States and most of those are employer based, we know of no studies that quantify the impact of managed care on chronically ill people covered by private employer-based insurance. Thus, this chapter is the first to analyze private insurance databases with respect to the chronically disabled population. We address important policy questions including these:

  • Are chronically ill people more likely to enroll in one type of plan or another?

  • Do those in managed care plans and those in indemnity plans have similar types of chronic illnesses and disabilities?

  • How does health care utilization vary by type of managed care plan?

  • Do those in managed care plans have lower health care expenditures than those in indemnity plans?

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