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


This report describes research conducted by The MEDSTAT Group for the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (hereafter referred to as ASPE). The primary aim of this study has been to explore and document the experience of persons with potentially disabling health conditions in private-sector indemnity and managed care plans. Other than general descriptive information from population-based surveys, little is currently known about this subject. This report fills a major gap in our research knowledge by presenting descriptive findings from a study of the insured populations of two large employers. Both descriptive and multivariate analyses were used to estimate the impact of managed care on health care use by privately insured populations with potentially disabling chronic conditions.

The use of managed health care by private and public payers of health care continues to grow in the United States. For example, enrollment in health maintenance organizations (HMOs) increased by about 85 percent from 1990 to 1996. By 1996 an estimated 67.5 million people (about one in four Americans) were enrolled in HMOs (American Association of Health Plans, 1998).

In the private sector today, more than 70 percent of workers in small and large firms choose a managed care plan (KPMG Peat Marwick, 1997; Jensen, 1997). Among firms with more than 200 employees it is now more common for a firm to offer various types of managed care plans than it is to offer traditional indemnity health insurance. Between 1992 and 1997 the percentage of enrollees covered by indemnity plans offered by large firms declined significantly from 45 percent to less than 20 percent. Conversely, U.S. employers saw substantial increases in enrollment in all types of managed care plans (Figure 1-1).

The growth of managed care has not been without concerns and complaints in recent years. Much of the shift to managed care for employees has not been optional (Center for Studying Health System Change, 1997), and some research has indicated that managed care may not be appropriate for those with special needs, such as the frail elderly and the disabled (Luft, 1991).

Despite concerns about the ability of managed care plans to meet the needs of special populations, certain aspects of managed care can offer better treatment to those with special needs. A single case manager or gatekeeper, for example, may help coordinate the myriad of patient services that is often required by persons with chronic illness or disability, and provide a better match between patient needs and service use (Batten et al., 1994). Managed care may also result in closer monitoring of the patient’s disease, and more appropriate use of preventive and disease management services that limit complications of disease. If successful, closer patient management may also limit the cost of care while enhancing its quality.

  FIGURE 1-1: Employees in Large Firms Covered by Managed Care and Indemnity Plans  
Bar chart.
SOURCE: KPMG Peat Marwick (1997).

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