Managed Care No Bargain?

Back Letter 16(3):25,34, 2001.

IntroductionProponents of managed care programs claim they provide more cost-effective care for musculoskeletal conditions than traditional fee-for-service plans. Managed care programs pride themselves on limiting unnecessary diagnostic services and excessive treatment costs. But does managed care actually save money in the treatment of musculoskeletal conditions?No, says a prominent epidemiologist, after a nationwide study of individuals with a cross-section of musculoskeletal problems. "There is no evidence that managed care produces savings for those with musculoskeletal conditions," says Edward Yelin, PhD. "This calls into question [the strategy of] using managed care to reduce costs," he adds. (See Yelin et al., 2000.) Yelin and colleagues studied the impact of managed care programs, fee-for-service programs, or a lack of insurance on overall health care costs for musculoskeletal conditions in the United States. He and his colleagues used data from the 1996 Medical Expenditures Panel Study to estimate comprehensive health care costs for a nationally representative sample of men and women with musculoskeletal conditions (identified by various ICD-9 codes). Data on 23,888 subjects served as the basis for the study. Yelin et al. divided the subjects into three categories: (1) those without health insurance; (2) those with fee-for-service insurance; and (3) those with managed care plans. Yelin et al. performed a variety of validation studies to confirm managed care plan participation. Extrapolating from their data, they estimated that 36.9 million individuals aged 16-64 in the United States (22% of this population) reported one or more musculoskeletal conditions. Of these individuals, 5.7 million (15.3%) lacked health insurance in 1996. Of those with insurance, 54% were enrolled in managed care plans and 46% in fee-for-service plans. Yelin et al. studied ambulatory, prescription, and total health care costs in regression analysis, taking into account the following co-variates: age, gender, race, Hispanic status, marital status, and extent of formal education. Subjects in managed care plans had virtually identical costs as subjects in fee-for-service plans. Costs were similar for ambulatory, prescription, and total health care costs. There was a trend for members of fee-for-service plans to have higher rates of hospital admissions, but it did not reach statistical significance. "Subjects with musculoskeletal conditions in managed care plans did not experience lower expenditures than those in fee-for-service," Yelin et al. conclude. Obviously, there are many different factors -- varying mix or severity of conditions in the two insurance groups -- that could possibly have affected the outcomes. Yelin, however, vigorously defended his conclusions. Yelin noted that these results are consistent with those from studies of individuals with osteoarthritis and rheumatoid arthritis. So what about individuals without health insurance? Based on the results of this study, not having health insurance dramatically lowers health case costs for musculoskeletal conditions. Overall, total expenditures for those without health insurance was about one-quarter that of individuals with insurance (a mean expenditure of $220 vs. $940 per year). Prescription costs showed a similar pattern. This may be a cruel form of cost-containment. This study did not examine the health care outcomes of individuals with and without health insurance. But Yelin, for one, believes that the uninsured are being denied needed health care services. "The uninsured don't get the care," said Yelin. "We are using lack of insurance as a way of reducing costs, and that is unethical," he added. Reference:Yelin E et al., A national study of the impact of health insurance and managed care on medical care: Expenditures for persons aged 16-64 with musculoskeletal conditions, presented at the annual meeting of the American College of Rheumatology, Philadelphia, 2000; as yet unpublished.