Unrealistic Expectations Born of Defective Institutions

Abstract

We, Americans, planted the seeds of the managed care backlash in the design of the health care and insurance institutions we created. The traditional model of health insurance based on fee-for-service, complete free choice of provider, and indemnity insurance (FFS), which was for many years the main form of insurance in this country, left providers largely unaccountable for the cost of care. When caring for insured people, providers could resolve every doubt in favor of doing more with no direct negative financial consequences for patients or themselves. When combined with rapidly expanding technology, these incentives led national health expenditures to increase rapidly through the 1980s, from 8.9 percent of gross domestic product (GDP) in 1980 to 13.6 percent in 1993 (Iglehart 1999). Equally important, FFS failed to hold health care institutions and professionals accountable for the quality of the services they provided or for the health of the populations they served. Under FFS, there were very wide variations in medical practices. Researchers found fiveand ten-fold variations in the per capita incidence of surgeries in different communities with no evidence of such differences in medical need or health produced (Wennberg and Cooper 1998; see also Iglehart 1984). Variations seemed to be determined more by “practice style” than by scientific evidence. This “cost-unconscious” milieu also produced large amounts of inappropriate treatments. Research found that 32 percent of carotid endarterectomies and 14 percent of coronary artery bypass surgeries were performed for