N502 Module 5 assignment: managed care, Medicare and Medicaid paper, a full sample

Who Pays, Who Manages, Who Gains: Managed Care, Medicare, and Medicaid in the U.S. Health Care System

Student Name

Master of Science in Nursing Program, Aspen University

N502: Health Care Systems

Instructor Name

Month Day, Year

Who Pays, Who Manages, Who Gains: Managed Care, Medicare, and Medicaid in the U.S. Health Care System

Managed care, Medicare, and Medicaid shape how most Americans receive health care. Medicare covers older adults and some people with disabilities, Medicaid covers many people with low incomes, and managed care, a set of techniques for organizing and paying for care, now runs through both public programs and private insurance. This paper explains how managed care developed and how it works, describes the structure of Medicare and Medicaid, reviews evidence on what public coverage does for health and financial security, and considers the implications for nurses in practice and leadership.

Managed Care: Origins and Methods

Managed care grew out of prepaid group practices such as Kaiser Permanente and was promoted by the Health Maintenance Organization Act of 1973, which encouraged the development of HMOs as a way to control rising costs. Under traditional fee-for-service insurance, providers were paid for each service and insurers had little influence over what care was provided. Managed care organizations change that by integrating the financing and delivery of care, using methods such as networks of contracted providers, primary care gatekeepers, prior authorization, utilization review, and capitation, in which a provider receives a fixed payment per enrollee regardless of how much care the enrollee uses (Young & Kroth, 2018).

Managed care takes several forms. Health maintenance organizations typically restrict coverage to network providers and require referrals for specialty care. Preferred provider organizations allow members to go outside the network at higher cost and usually do not require referrals. Point-of-service plans combine features of both. During the 1990s, public backlash against restrictions on choice and denials of care led many plans to loosen controls, and today most employer coverage uses looser forms of managed care, while tighter models are common in public programs.

The evidence on whether managed care improves quality is mixed. Its tools can reduce unnecessary hospital days and duplicative testing, and capitation gives organizations a financial reason to invest in prevention and care coordination. The same tools can also delay necessary care when prior authorization or narrow networks create barriers, and capitation can reward avoiding sick enrollees. The results depend heavily on how a plan is designed and monitored, which is why public programs that rely on managed care increasingly tie plan payments to measures of access and quality.

Medicare

Medicare, enacted in 1965, is a federal program covering most adults aged 65 and older, people under 65 with certain long-term disabilities, and people with end-stage renal disease. It has four parts. Part A covers inpatient hospital care, skilled nursing facility care after a hospitalization, hospice, and some home health care, and is financed mainly by payroll taxes. Part B covers physician services, outpatient care, and preventive services and is financed by premiums and general federal revenue. Part D, added in 2006, covers prescription drugs through private plans. Part C, Medicare Advantage, allows beneficiaries to receive their Part A and B benefits, and usually Part D, through private managed care plans that receive a capitated payment from Medicare.

Medicare Advantage has grown rapidly and now enrolls more than half of eligible Medicare beneficiaries (Freed et al., 2024). Supporters point to extra benefits, such as dental and vision coverage, and to care coordination; critics point to narrower networks, prior authorization requirements, and payment rules that may overpay plans. For nurses, the growth of Medicare Advantage means that more older patients' care is shaped by plan rules on authorization, post-acute placement, and length of stay.

Medicaid

Medicaid, also enacted in 1965, is paid for jointly by Washington and each state, and each state runs its own program within federal rules. It covers low-income children, pregnant people, parents, older adults, and people with disabilities, and no other payer spends as much on long-term care. Under the Affordable Care Act, Congress extended eligibility to nearly all low-income adults, with an income cutoff set just above the federal poverty line, but a 2012 Supreme Court decision made the expansion optional, so eligibility for low-income adults now differs sharply from state to state. Most states deliver Medicaid through contracts with managed care organizations.

Evidence on what Medicaid coverage does is unusually strong because of a natural experiment. When Oregon used a lottery to offer Medicaid to low-income adults, researchers compared winners and nonwinners. Two years later, Medicaid coverage had increased the diagnosis and treatment of diabetes, reduced the probability of a positive depression screen by about 9 percentage points, increased the use of preventive services, and nearly eliminated catastrophic out-of-pocket medical spending, although it had no significant effect on measured blood pressure, cholesterol, or glycated hemoglobin (Baicker et al., 2013). A study of earlier state Medicaid expansions for adults found a 6.1 percent relative reduction in all-cause mortality in expansion states compared with neighboring states, along with lower rates of delayed care because of cost (Sommers et al., 2012). Taken together, the evidence shows that Medicaid clearly improves financial security, access, and mental health, while its effects on some physical measures take longer to appear or are harder to detect.

Implications for Nurses

These programs shape nursing practice in concrete ways. Case managers and discharge planners work daily with Medicare's rules for skilled nursing and home health coverage and with Medicare Advantage and Medicaid managed care plans' authorization requirements; understanding those rules helps nurses plan safe discharges and avoid delays. Nurses in primary care and community settings see the difference coverage makes when patients can afford medications and follow-up visits. Advanced practice nurses bill Medicare and Medicaid, and payment policies affect where they can practice and how their services are valued.

Nurse leaders also have roles in managed care itself. Many managed care organizations employ nurses in care management, utilization review, and quality improvement, where they can steer care toward prevention and coordination rather than simply limiting it. Finally, because Medicaid eligibility depends on state decisions, nurses who understand the evidence can speak in state policy debates about expansion, enrollment procedures, and coverage continuity.

Conclusion

Managed care changed U.S. health care by joining payment and delivery and giving insurers tools to manage cost and use, and those tools now operate inside Medicare and Medicaid as much as in private insurance. Medicare provides near-universal coverage for older adults through a mix of traditional and private plans, while Medicaid covers low-income populations through a federal-state partnership that varies by state. The evidence that Medicaid coverage improves access, financial security, mental health, and possibly survival makes these programs central to health outcomes, and nurses who understand them are better able to care for patients and to shape the policies that determine who is covered.

References

Baicker, K., Taubman, S. L., Allen, H. L., Bernstein, M., Gruber, J. H., Newhouse, J. P., Schneider, E. C., Wright, B. J., Zaslavsky, A. M., & Finkelstein, A. N. (2013). The Oregon experiment: Effects of Medicaid on clinical outcomes. New England Journal of Medicine, 368(18), 1713-1722. https://doi.org/10.1056/NEJMsa1212321

Freed, M., Biniek, J. F., Damico, A., & Neuman, T. (2024). Medicare Advantage in 2024: Enrollment update and key trends. KFF. https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2024-enrollment-update-and-key-trends/

Sommers, B. D., Baicker, K., & Epstein, A. M. (2012). Mortality and access to care among adults after state Medicaid expansions. New England Journal of Medicine, 367(11), 1025-1034. https://doi.org/10.1056/NEJMsa1202099

Young, K. M., & Kroth, P. J. (2018). Sultz & Young's health care USA: Understanding its organization and delivery (9th ed.). Jones & Bartlett Learning.