Downturn of Health Maintainance Organization Term Paper

Downturn of Health Maintainance Organization - Term Paper Example However, they failed to contain costs and customers. With a decrease in services offered, HMOs are chosen only when no alternative is available. Moreover, only non – profit and independent HMOs fare due to lower premiums they offer to employees. Saturation of markets has increased competition among HMOs. State actions failed to restrain HMOs. Despite legislation and ombudsman offices protecting customers, premiums increased in the 2000’s, while quality remained limited. Physicians, as a result, have been leaving HMOs as well. Solutions need to focus on quality and profits. Involvement of specialists in prevention would assist patients with disabilities better. Autonomy of physicians, even if at the cost of their salary, needs to be increased. Administrative costs need to be decreased. Rising costs due to improved medical technology, aging population, and increased coverage led to a need for cost containment (Simonet, 2007, 356). The Health Maintenance Organization (HMO) Act was passed in 1973 and it granted monetary advantages to HMOs (Simonet, 2007, p. 357). Managed care has since then become a dominant form of healthcare provision in the United States. By 1996, around 100 million Americans were enrolled in managed care (Grabois & Young, 2001, p.13). In 1987, only 11 percent Americans were enrolled in HMOs (Schulz, Scheckler, Girard & Barker, 1990, p.44). Growth rates of HMO coverage in the 1990’s stood at 10 percent (Simonet, 2007, p.573). In 2007, around 87 million persons were enrolled in some kind of an HMO (Simonet, 2007, p.573). HMOs decreased a rise in healthcare costs by 44 percent, but largely due to a decrease in quality and scope of services offered (Simonet, 2007, p.359).