State Innovations in Child Welfare Financing. Limitations of Managed Care


As the field has matured, the American public has become increasingly critical of many aspects of medical managed care, such as the requirements by insurance companies that providers obtain authorization before ordering a variety of procedures and tests (sometimes denying the requested care) and mechanisms that limit the freedom of patients to choose providers. (Public demands have led both houses of Congress to pass Patient's Bills of Rights.) The results of the widespread implementation of managed medical care have been ambiguous, and it can be reasonably said that the jury is still out. It is not evident that medical managed care has saved money. And everyone agrees it has not led to increased health care coverage for the uninsured. Many people have, however, argued that it has spawned its own kind of abuses and conundrums. What remains to develop is a consensus on whether the abuses and conundrums under the old system are qualitatively and quantitatively worse than those observed under the new system (Hurley, 1998). Described as “neither poison nor panacea” commentator Robert Hurley states, “A balanced summary judgement would be difficult, but it can be safely asserted that in general the experience has been better than its critics would acknowledge but less beneficial than apologists would contend.”

In child welfare, in spite of the impetus of rising costs, many factors have contributed to the states’ reluctance to jump aboard the managed care bandwagon. First, a diverse set of federal and state initiatives throughout the 1990s competed with managed care, the Adoption and Safe Families Act (ASFA)4 clearly being the most important of these. While ASFA helped promote fiscal reform efforts in numerous states, the array of family preservation, reunification, and adoption-oriented initiatives it encouraged often competed with fiscal reforms for limited management resources. Second, state agencies have less leeway regarding protecting vulnerable children than third-party payers have in providing medical care. Most crucially, the ultimate decisionmaking authority in most cases remains with the courts rather than with the state agency, limiting the ability to make definitive case plans.

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