Managed care; nonprofits in healthcare HDHP

A brief history of the growth of HMOs is provided. Without the passage of the Health Maintenance Organization Act of 1973 and subsequent legislative revisions, it is questionable whether HMOs — and their cousins, PPOs and POSs — would ever have gained traction in the market. In less than 25 years, health plan enrollment of covered workers went from 73% in FFS plans to just 1%.

More recently, high deductible plans (HDHPs) have blossomed, coming seemingly out of nowhere to no accounting for about 13% of covered workers. Why? The following article from Kaiser Health News & the Washington Post suggests that an effort by employers to cut costs is the reason: http://www.kaiserhealthnews.org/Stories/2012/June/04/high-deductible-health-insurance.aspx

Do you agree?  If we assume that firms are profit maximizers, then we also must assume that they are cost minimizers (at a given level of output). Why would employers suddenly wake up and start adopting HDHPs? In 2 paragraphs, single space. 

 

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