Study Guide #3
Coddington and Robinson

Coddington’s Beyond Managed Care has a back cover in which a fellow health care consultant claims that the book “picks up where Paul Starr’s Social Transformation of American Medicine left off, and will soon become a classic of equal stature.” As I think you will soon agree, that comment is laughable, even given the natural inclination to puff up in blurbs. (I daresay only a consultant could possibly believe this!) Nonetheless, Coddington is useful for describing (albeit breathlessly) a few of the trends in health care since Starr wrote his book.

Consultants—and, I must admit, health policy researchers—love acronyms, so be prepared for an onslaught of PPO’s, PHO’s RBRP’s and so on. The author assumes you basically understand all these terms, so a few key definitions:

HMO—basically what Starr calls a “direct service” plan, this is described in Starr

PPO— Insurers limit you to certain health care providers who they think will practice medicine in such a way as to limit costs.

DRG—Medicare cost-control system introduced in early 1980s that requires caregivers to specify exactly what disease they are treating; a fixed payment is made for each disease.

PPO’s, PHO’s, IPA’s—all of these are forms of organization of caregivers; the caregivers can then contract with insurers to provide services together.

Capitation—caregiver or caregivers agree to a certain fee per year for handling all medical services for an insured person. In comparison to fee-for-service, this shifts risks to caregiver since the insured individual may require tons of services in a year, much more than the capitation payment. (Or the individual might require no services at all, in which case the caregiver pockets the payment.)

Managed Care—I’ve never seen a definition, but basically it seems to be any intervention by a third party into the caregiver-patient relationship that seeks to control costs or quality. However Coddington has a much more simple definition (28).

Questions to ask yourself as you read Coddington:

1. What are the major shifts in the way non-governmental health insurance is organized in the past 20 years?

2. How have Medicare and Medicaid programs attempted to employ managed care?

3. What is “cherry-picking” (Hint: adverse selection)

4. What is the reaction of doctors to managed care? (Hint: not happy)

Robinson

I think I told you in class that this is my favorite health policy article of the past couple of years (though Reinhardt’s piece on the uninsured and Hacker’s comparative article are contenders). Robinson describes managed care as a financial success, but a cultural and political failure. This is now conventional wisdom, but notice why managed care failed politically—and think about the lessons of this episode in health policy as you consider your own health proposals.

Questions:

1. A key to the political fate of managed care, Robinson argues, is that the cost of health care controls is visible to employees, but the benefits of such controls are relatively invisible. Why? (Hint: this relates to the economics of employee benefits. Notice that this economics has powerful political consequences.)

2. What are employers doing in reaction to employee anger over managed care?

3. What is the “fundamental flaw” of managed care according to Robinson?

4. Managed care organizations, Robinson argues, have given up on managing costs. What will they do instead?

5. What is happening to the physician organizations that were formed during the high point of managed care?

6. What three strategies are there for controlling health care costs? Why are they politically problematic?

7. What three features have pushed health care financing into an era of “consumerism” according to Robinson? (Note: I believe he wrote this at the high point of the internet boom.)

8. What four problems will plague a consumer-driven system? On what bases does Robinson say that consumerism falls short on many counts, but nonetheless concludes that it may be the right thing for American health care?