The Managed Care Backlash And The Task Force In California

Abstract

PROLOGUE:California represents a lively laboratory, in which issues that eventually concern the whole nation are worked through in a colorful, often contentious fashion. This is certainly true of managed care. The state has felt its share of the “backlash” against managed care on the part of consumers and others. In response to a rising chorus of concerned voices, California Governor Pete Wilson (R) and the state legislature appointed a thirty-member task force to examine “the appropriate role of government in guaranteeing the highest standards in quality of care.” The task force issued its final report in January 1998. True to the combative nature of the managed care debate there, some legislators and consumer advocates scored the report as “disappointing” and “weak,” while the governor praised it and quickly signed into law several of its 100 recommendations, and many managed care companies gave it their grudging approval. Many of the recommendations put forward by the governor's task force were similar to those advanced in the final report of President Clinton's Advisory Commission on Consumer Protection and Quality in the Health Care Industry.In this paper Alain Enthoven, the task force's chairman, and Sara Singer, its staff director, present their interpretation of the task force's work. Enthoven is the Marriner S. Eccles Professor of Public and Private Management at the Graduate School of Business, Stanford University, in Stanford, California. He holds degrees in economics from Stanford, Oxford, and the Massachusetts Institute of Technology. Singer directs the Health Care Management Program at the Stanford Graduate School of Business. She holds a master of business administration degree from Stanford. Signs of a managed care backlash in California are increasing. This paper reports and interprets the recently completed work of the California Managed Health Care Improvement Task Force, focusing on the managed care backlash and the state's regulatory response. Although cost containment was a contributing factor, the causes of and solutions to the backlash differ among consumers, physicians, health care workers, politicians, and health plans. The recommendations of the task force could improve the market for health insurance. However, lasting solutions to the profound problems causing the backlash will require fundamental cultural and systemic change.