State Innovations in Child Welfare Financing. Managed Care Assumptions


Because managed care practices were developed in the medical field, they require some adaptation to be applied to child welfare. Whether managed care can be adapted sufficiently to operate effectively in the child welfare arena depends on the following assumptions:

  1. Economic incentives are important determinants of service provision in child welfare. Increased expenditures in child welfare may be the result of perverse economic incentives. Private agencies can and should share some of the financial risk of increased foster care costs with state agencies.
  2. Decisionmaking in child welfare is sufficiently sophisticated that the appropriate course of action can be determined in most cases.
  3. It is possible to set rates of payment for services under managed care arrangements that will allow a well-managed agency to cover its costs. This implies that reasonable predictions of costs are possible.
  4. Prevention of placement is possible but often requires the availability of other supports and services.
  5. Services offered by community-based organizations are more effective than more traditional services. The task for contractors or other case managers is to develop and manage flexible provider networks within the client’s neighborhood and social networks.

How each of these assumptions plays out in child welfare is considered next.

View full report


"report.pdf" (pdf, 545.25Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®