Why managed care has failed to contain health costs.

Much evidence points to the fact that managed care plans (health maintenance organizations and preferred provider insurance) reduce costs and offer value for money. Yet they apparently have not helped to slow national health expenditures. One explanation is that the practices of purchasers (including government and employers), the tax laws, and other market imperfections have reduced the demand for real cost containment, depriving managed care plans of an adequate incentive to cut cost and price. These market conditions can and should be corrected; the managed competition proposal being discussed at the national level is a comprehensive plan for doing so.

Variation of employee benefit costs by age.

Health care, pension, and disability plans account for the bulk of employers' benefit costs, as defined in this article. Because those costs tend to rise as employees get older, the age structure of the workforce affects not only employers' costs but ultimately their competitiveness in global markets. How much costs vary depends in large part on the structure of the benefits package provided. The method a company chooses to finance benefits generally varies with its size. This article focuses primarily on the benefit practices of large, private employers. In the long run, such employers pay the costs associated with the demographics of their workers, whereas small employers can often pool costs with other companies in the community. In addition, small employers often offer fewer benefits, and the costs and financing of those benefits are subject to the insurance markets and state regulations. The discussion of benefit packages is illustrated by case studies based on benefits that are typical for three types of organizations--a large traditional company such as steel, automobile, and manufacturing; a large financial services company such as a bank or health care organization; and a medium-sized retail organization. The case studies demonstrate the extent to which the costs of typical packages vary and reveal that employers differ radically in the incentives they offer employees to retire at a specific time. An employer can shift the variation in cost by age by changing the structure of the benefit program. The major forces that drive age differences in benefit costs are the time value of money (the period of time available to earn investment income and the operation of compound interest) and rates of health care use, disability, and death. Those forces apply universally, in the United States and elsewhere, and they have not changed in recent years. However, the marketplace and the prevalence of various types of benefit programs have changed, and those changes have generally resulted in less cost variation by age and more frequent employer selection of benefit packages that exhibit less variation by age.

The battle over benefits.

Squeezed in a tight economy, companies are looking for savings where once they didn't dare: in health insurance and pension costs. Employees get panicky at the thought.

Companies hate the health plan.

After a close look at President Clinton's proposal, many employers conclude they'd be stuck paying for a huge new entitlement they could not afford.

Sticker shock at the hospital. Freed from reins of managed care, hospitals accelerate price hikes for fourth consecutive year; blame placed on staffing, tech costs.

Free from the shackles of managed care, the nation's hospitals boosted prices for the fourth consecutive year, according to a new report released by the government last week. David Cyganowski, left, a managing director at Salomon Smith Barney, says if taxes on dividends are wiped out, hospitals could be confronted with higher long-term interest rates.

Will cost hikes bring employers back to capitation contracts?

Concerned about the recent increases in health care costs, employers are once again looking for solutions. Providers and plans that know what employers are thinking can structure their offerings to meet the need.

Health care challenges and opportunities in the 1990s.

The 1990s offer both substantial challenges and opportunities for those involved in the delivery of health care. Increasing costs must be managed to ensure that the health of both Americans and America's economy are maintained. Managed care offers the brightest hope for effectively controlling costs while increasing the quality of care.