Medicaid and Managed Care Plans

Topic: Administration
Words: 1426 Pages: 5


In the United States, healthcare is often associated with significant expenditures. Managed care plans are programs that aim to reduce or optimize one’s payments for healthcare services. Medicaid, being one of the most popular insurance types, gives its users access to low-cost services with continuously improving quality, although it limits their choice of providers (Garfield et al., 2018). TRICARE’s preferred provider organization (PPO) plans have higher price markups yet give a more comprehensive selection of professionals within many, although not all, states (Ben-Shalom et al., 2019). Overall, managed care plans increase the quality of care through financial incentives for positive performance and keep the costs of services from rising at a rapid pace. There are issues that require the attention of policymakers, as the disparity in healthcare access remains present.

Managed Care Plans

The healthcare system in the United States is notoriously complex and overburdened with fees. The current approach to healthcare forces people to perform an extensive search for the best possible healthcare plan accessible to them. The goal of every managed care plan is to find an appropriate balance between the quality and the costs of care. There are four approaches to managing one’s health insurance: health maintenance organizations, preferred provider organizations, points of service, and exclusive provider organizations (Araujo, 2022). Each plan lowers or, at least, optimizes payments and strives to decrease wasteful expenditures, although in a particular way that is often limited within a network of healthcare providers. Since the quality of provided care is directly linked to one’s insurance plan, choosing an appropriate managed care plan dramatically affects a person’s well-being. In this essay, managed care plans in the U.S. healthcare system will be discussed, and the pros and cons of two popular programs will be shown.

Performance of Medicaid Managed Care

Perhaps, one of the most popular HMOs is Medicaid Managed Care by the Centers for Medicare & Medicaid Services. Its managed care plan is widely used by Americans, with approximately one-fifth of all citizens being covered by Medicaid (AHIP, 2020). First and foremost, Medicaid is known for its accessibility to lower-income households. It has the lowest annual payments in the vast majority of states (Hinton & Stolyar, 2020). This plan is connected with numerous managed care organizations (MCOs) across the United States, creating a vast network that is accessible for a reasonable price. MCOs within this managed care plan is shown to strive for better outcomes and recognize the necessity to raise the quality of care in the country (AHIP, 2020). Medicaid is also the most used provider for a different reason: it focuses on achieving equity above all. Hinton and Stolyar (2020) state that Medicaid MCOs “promote strategies to address social determinants of health” by connecting people in need with social services and community-based organizations. It is apparent that the popularity of Medicaid is not baseless.

However, Medicaid MCOs operate in a separate network within each state, making it challenging for its users who often travel to consider binding themselves to a single PCP. Despite being similar in their nature, almost 75 percent of Medicaid Managed Care options are only state-wide (Garfield et al., 2018). This issue is further perpetuated by the need to seek referrals when a specialist is required. Individuals are ushered to select a PCP who will be transferring their patients to in-network specialists, which gives the users of this plan fewer options (Araujo, 2022). In turn, PCPs are also adversely affected by this necessity. These stakeholders have to make shared risk arrangements with specialists they refer high-risk patients to, which further complicates insurance calculations (Hinton & Stolyar, 2020). The issues are serious, yet they are not sufficient to call this plan a failure. With future adjustments, it is clearly possible for Medicaid to begin reducing the average cost of healthcare in the United States.

Performance of TRICARE

The second managed care plan that will be reviewed in this paper is TRICARE, specifically, its PPO method. A PPO approach to managing healthcare has notoriously high annual premiums, although it is also the most flexible type of plan (Araujo, 2022). This factor serves as the primary advantage over other healthcare insurance plans. TRICARE users report having fewer issues in finding a suitable primary care provider (PCP) (Ben-Shalom et al., 2019). The flexibility of the PPO structure allows TRICARE to remain viable in the majority of locations, as there is no need to be bound to a single place. The essential difference between PCP from Medicaid Managed Care is also complemented by TRICARE enrollees being able to visit specialists with ease (Ben-Shalom et al., 2019). Being able to find help anywhere is a vital feature of TRICARE. Almost two-thirds of providers in service areas have a membership in TRICARE’s network (Ben-Shalom et al., 2019). These benefits ensure that TRICARE’s high price markup is entirely justified.

As has been discussed before, the apparent disadvantage of this managed care plan is its high annual payments, although there are other issues present. There are states which do not have sufficient service areas for TRICARE, such as New Mexico, Colorado, and Alaska (Ben-Shalom et al., 2019). Moreover, some areas have too few TRICARE beneficiaries, making it a non-viable option for local providers to accept (Ben-Shalom et al., 2019). The lack of coverage puts the flexibility of this plan into question when considering the sharp increase in service costs outside of service areas. Such zones present a challenge for TRICARE beneficiaries, as there are issues with the acceptance of this insurance that are yet to be fixed (Ben-Shalom et al., 2019). Overall, TRICARE patients’ experience is above national benchmarks for managed care plans (Ben-Shalom et al., 2019). Despite its issues, this plan does work better for people who are willing to pay more and get greater access to healthcare services in return.

Analysis of Performance of Managed Care Plans

Despite its apparent complexity, the U.S. healthcare system continues to evolve its quality of care. The study by AHIP (2020) reveals that “Medicaid managed care plans improved their performance on 26 out of 30 HEDIS® and CAHPS® quality measures.” Since Medicaid is the most extensive insurance plan in the United States, its satisfactory state signifies that the overall direction is positive. Managed care plans are now able to deal with the fragmented healthcare system efficiently and promote competition among providers, thus lowering the costs of their services (Namburi & Tadi, 2022). Their beneficial influence is a significant positive factor in the well-being of U.S. citizens. With the rise in the popularity of risk-based assessments, managed care plans can further constrain unnecessary expenditures (Hinton & Stolyar, 2020). It is crucial to find a way to satisfy each person’s needs without charging extra.

At the same time, the average expenditures on healthcare services continue to grow. Nowadays, a person spends approximately 10,700 dollars on their health annually (Namburi & Tadi, 2022). Fee-for-service (FFS) situations still persist and can wipe out one’s savings in an instant. Even among providers who are enrolled in Medicaid, 93% continue to charge fees for service in some cases (Garfield et al., 2018). The issue is partially sustained by the fact that employers are binding their employees to a single insurance provider and continue to support non-sustainable managed care plans (Enthoven, 2021). It is necessary for the United States to address the archaic and detrimental mechanisms to ensure that managed care plans provide maximum coverage. The issues with accessibility and acceptance of various programs may remain present as long as people are denied necessary care due to being lost in the complexity of the healthcare system.


In conclusion, there are significant improvements in the United States healthcare system that positively affect the effectiveness of managed care plans. Nowadays, people can enjoy better access to services, often by paying less than before. Medicaid Managed Care and TRICARE give diametrically opposite options for their enrollees. They cover a vast portion of the U.S. population and provide a choice between the quality, accessibility of care, and costs. Many plans do not present sufficient coverage, have strict limitations on one’s choice of providers and specialists, and require too many out-of-pocket payments. It is essential to consider giving people the care they need without bankrupting them in the process. Managed care plans do have a positive influence on that factor, yet this approach is not yet enough to begin reducing the annual healthcare costs per individual. The healthcare system relies significantly on the ability of insurance and care providers to find a sustainable way to facilitate access to medical services for everyone in need.


AHIP. (2020). New study: Quality performance is up across the board for Medicaid Managed Care plans.

Araujo, M. (2022). Understanding differences of managed care plans: HMO, PPO, POS, EPO. The Balance.

Ben-Shalom, Y., Schone, E., & Bannick, R. (2019). Provider acceptance and beneficiary access under TRICARE’s PPO health plan. Health Affairs, 38(8), 1343-1350.

Enthoven, A. C. (2021). Employer self-funded health insurance is taking us in the wrong direction. Forefront Group.

Garfield, R., Hinton, E., Cornachione, E., & Hall, C. (2018). Medicaid managed care plans and access to care: Results from the Kaiser Family Foundation 2017 survey of Medicaid managed care plans. KFF.

Hinton, E., & Stolyar, L. (2020). 10 things to know about Medicaid managed care. KFF.

Namburi, N., & Tadi, P. (2022). Managed care economics. National Center for Biotechnology Information.

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