Health insurance and managed care: How it works?

Health insurance

Managed care in health insurance is a concept that is popular in America. Managed care was introduced in the 1980s and has been around ever since. The concept aims to reduce the overall medical insurance costs by intertwining a number of healthcare centres, healthcare professionals and healthcare practices to bring down the medical expenses. Managed care is a useful practice in not just America, but other countries too can benefit from it, provided the implementation happens correctly.

What exactly is managed care?

Let us begin by understanding the concept of managed care. Managed care refers to the practice of linking a patient’s illness with the best possible healthcare facilities, at the lowest possible rates. To achieve this, insurance companies work in association with specific doctors and medical centres. The following is taken into consideration when implementing managed care:

  • Ethical and correct assessment by a physician: Unfortunately, there is a reduced amount of ethics in medicine these days. Hospitals and healthcare professionals purposely delay diagnosis or put the patients through a series of tests to determine the problem. This pushes up the healthcare expenses. Under managed care, quick and efficient diagnosis is sought so that the unnecessary medical expenses can be reduced.
  • Specific mechanisms to reduce costs: The managed care health insurance providers often employ specific mechanisms to reduce costs. For example, the doctors and patients are financially rewarded for finding a cheaper treatment alternative. This again helps to bring down the overall medical costs.
  • Revision of medical necessity: Like mentioned above, at times, some tests are redundant. A physician registered in the managed care network constantly reviews the necessity of the diagnostic tests and selects the minimum tests required to make a proper assessment of the medical condition.
  • Controlling the hospital stay: Patients are not admitted or kept in the hospital for unnecessarily long periods of time. The managed care system looks to decrease the hospital stay duration to ensure cost-cutting. Also, a lot of importance is given to outpatient services, including outpatient surgeries.
  • Cost sharing practices: Cost sharing is an essential component of managed care. The insurer and the policyholder agree to share the costs, thereby reducing each other’s’ burden.

What is the importance of managed care?

Managed care health insurance plans are more affordable. It is a viable option for the insurance providers as well as the policyholders. The insurance companies have a lesser burden to bear and the policyholders find health insurance at discounted prices. This is an important factor as it makes health insurance accessible to a larger number of people and also keeps the health insurance industry in a profitable state.

What is the feasibility of managed care in India?

The Indian healthcare industry is quite in need of a system like this. The industry as a whole is making very little profit. There are various reasons for this. Unethical practices are a main factor. Health insurance is badly exploited by a handful. Too many medical procedures are carried out without any need and unnecessarily high claims are made. The loss of the industry spills over to the plans which are generally quite expensive. This makes health insurance inaccessible for a large section of society,

A control therefore needs to be brought into the entire system and managed care seems to be the perfect solution. If the unethical practices are removed, quicker and faster diagnosis will be made and the costs will be shared too. This will lead to a very positive change in the health insurance industry. This will benefit the insurers as well as the proposers.


Managed care is a very good concept that every country can benefit from. It needs to be implemented in India too as there are many advantages waiting to open out. The insurance companies as well as the health insurance seekers will find managed care useful and the health care sector will see the benefits too.

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