The Political Management of Managed Care

Explaining Variations in State Health Maintenance Organization Regulations

This paper, the first 50-state analysis of the politics surrounding anti-managed care legislation, provides a discussion of how state governments approach regulation of managed care organizations, as well as a history of HMOs and of the backlash against them in the mid 1990s. A focus of discussion is how states manage to control HMOs and which external organizations have played a role in fostering the passing of state regulations. The authors discuss in detail how regulation of HMOs flourished at a time when public policy on health care was often described as frozen or gridlocked. The authors also detail types of regulations adopted, dividing them into 'highly restrictive,' 'moderately restrictive,' and 'less restrictive.'

Most states had enacted regulations of the managed care industry by 2000. Physicians' groups and advocacy groups (for patients, women, the elderly), were some of the primary organizers fueling states' adoption of managed care regulation. Opponents of regulation included business associations, HMOs and lawyers. Although the authors' hypothesis that health systems with greater representation by independent providers would be more likely to regulate HMOs was supported, a surprising result of their analyses was that in states where HMOs had relatively greater representation, more regulations were passed. Of several possible explanations for this phenomenon, the authors lean toward the explanation that HMOs may have opted not to fight reform in places where they had numerous pressing issues on health policy agenda.

The authors' analyses also yielded the result that HMO regulation seemed to arise more as a response to political pressures than to policy needs, although the latter may have been a strong impetus for initiating regulatory reform. In a sense, this analysis concludes, "HMO regulations may resemble more the kind of democratic frenzy or bandwagon effect" than they do politics usually observed with health policy issues.

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