Managed Care as a Public Cost-Containment Mechanism

Dana Goldman

RAND Journal of Economics, 1995, vol. 26, issue 2, 277-295

Abstract: This article identifies the impact of managed-care reforms on the utilization of medical services within the military health-services system. The data come from a recent demonstration project that substituted an HMO and PPO for traditional FFS arrangements. Results from a semiparametric model indicate that the generosity of benefits in the HMO increased demand for ambulatory services. Unlike private-sector experience with managed care, aggressive utilization review did not significantly curtail inpatient stays. These results vitiate the presumed effectiveness of reform strategies that rely on large, geographically diffused managed-care networks to contain public-sector health costs.

Date: 1995
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