We have analyzed and study the major player of this sector, National Health Insurance Company- Daman. We have explored their plans and operations. We have also tried to discuss the ever lasting argument, if Managed Care really helps to cut cost and how managed care has helps in improving the standards of patient's care. We have tried to understand these arguments with the economic theories presented by a number of researchers and tried to highlight the major issues related to it.
It is a widely accepted that the managed health care plans including health maintenance organizations and insurance providers reduce costs while offering high level health care services and facilities. But still, it can be argued that they had no contribution towards reducing national health expenses of the government. The practices of purchasers including government and employers along with the tax laws and other market imperfections have reduced the demand for real cost containment and reducing the managed care plans of an enough incentives to cut cost and price (Enthoven, 1993). ...
People are more reluctant towards the risks as the illness and the treatment cost are uncertain factors. These have lead to the requirement of insurance. But the insured people approaches for more care while their physicians support them in doing so. They support them to buy more care after they are insured which they wouldn't have approached if they were not insured. Usually the physicians are paid for their services in the form of high incentives and they are always willing to provide more services. This has resulted in the increased supply of specialists along with new technology developments raising the demand as well as the cost and thus, increasing the per capita expenditures of the nation. The products and services markets are usually consist of suppliers and individual purchasers. This is the standard model for insurance services including health insurance. Sometimes there are sponsors or agents contracting on behalf of a group of insured people getting coverage for all or offering different health plans to individuals as per their choice.
The theories like inelastic and elastic demand can be also helpful in understanding if Managed Care help cut cost. The total revenue-price times quantity-is measured by the area of the rectangle under the demand curve. As shown in the graph below, total revenue is greater in case of higher price in the case of inelastic demand. Where as the total revenue is more with lower price, in case of elastic demands. When health care costs