Abstract
Insurance companies are often considered the origin of MCOs. Even though this is true regarding the revival of managed care since the mid-1970s, MCOs in the United States originated in the form of prepaid group practices (PGP) connected to the assumption of risks by service providers in the 1920s. In rural areas physician group practices offered to let residents use the services of the group practice without restrictions in return for monthly or annual payments. Services outside of the group practice were not covered.
The term health maintenance organisation (HMO) was coined by the physician Paul Ellwood at the beginning of the 1970s. In order to replace the negatively connotated term prepaid group practice. However, HMOs did not achieve their breakthrough with market successes, but rather through state regulations. The HMO law introduced by Nixon in 1973 prescribed that employers with 25 or more employees who provided their staff with healthcare as a social benefit had to offer at least one HMO product. HMOs could only become established thanks to this state stimulus, which opened doors to potential customers.
Notes
- 1.
The subsequent section was written by Prof. Dr. Mirella Cacace.
- 2.
It should be emphasised that CDHP is only a rudimentary form of insurance with limited risk pooling. However, as for example Schreyögg (2003) argues, it is still justified to call it an insurance because the savings are also a form of risk coverage.
- 3.
This prompted Uwe E. Reinhardt from Princeton University to write an amusing (though probably fictitious) anecdote in the Economix blog of the New York Times. He describes how his wife signs him up for a coloscopy shortly before Christmas in order to use up the remaining available balance in his FSA (see U. E. Reinhardt: The Trouble with (In)flexible Spending Accounts: http://economix.blogs.nytimes.com/2009/05/29/the-trouble-with-flexible-spending-accounts/).
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Amelung, V.E. (2013). Insurance-Based Managed Care Organisations and Products. In: Healthcare Management. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-38712-8_5
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