The "Maine" Issues in Managed Care

Election time is coming up again in Maine, and gubernatorial challengers have started raising concerns about the steady rise of taxes in the state. The media focus is becoming more intense, and the present governor, George Mayes, is looking for ways to save money - and his job. After the last election, he cut funding to education and raised the state tax on gasoline, and the outcry from the teachers unions and motorists throughout the state nearly got him recalled. He now realizes that he needs to find a way to cut the budget that will make him look like a hero. He chooses health care reform as the battleground for re-election.

You are the health care advisor to Governor Mayes. The Governor calls you in for a meeting and notes that the costs of the state's Medicaid program continue to spiral upward and that something needs to be done about it. When you agree that costs need to be contained, the governor says that he is considering whether to engage a company to investigate the implementation of a managed care operation such as Medicaid. He asks you for some advice on how managed care could address the unique economics of the health care field.

Discuss four (4) specific shortcomings that exist in health care economics and six (6) economic consequences of these shortcomings. In addition, discuss four (4) ways that managed care organizations (MCOs) can impact these economic concerns or issues.