Overview

Today in the United States, national health expenditures total more than $700 billion and make up over 13 percent of the gross domestic product (GDP). By 1995, they are projected to rise above $1 trillion and to comprise 15.6 percent of the GDP (Burner, Waldo, and McKusick, 1992). In spite of this level of expenditure, 15 percent of Americans are still without any form of health insurance and an additional 10 percent are inadequately insured. The President's proposed approach to health care reform and virtually all other national health care reform proposals under consideration rely on health maintenance organizations (HMOs) and other forms of managed care to reduce the rate of health care cost increases while expanding coverage. The focus of this issue of the Health Care Financing Review is on recent empirical evidence from studies of Medicare and Medicaid managed care programs, including an examination of some new methods for setting payment rates to maximize the impact of managed care. As an introduction to these articles, it may be useful to briefly review the history of managed care, with an emphasis on programs financed by the Federal Government.