Managed Health Care can trace its beginnings back to the 19th century, designed to meet the needs of select groups of people, including rural residents and workers and families in the lumber mining and railroad industries. Enrollees paid a set fee to physicians who then delivered care under the terms of their agreement. (Tufts Managed Care, 1998, ¶1) Since these beginnings, other forms of managed care have appeared over the last century, from the rural health plan in Elk City, Oklahoma in 1929 to the precursor of today's modern Health Maintenance Organization (HMO), Group Health Association in 1937. .
In 1971, the Nixon Administration announced a new health strategy; the development of health maintenance organizations. "The federal government would establish planning grants and loan guarantees for HMO's towards a goal of increasing the number of HMO's from 30 in 1970 to 1,700 by 1976, enrolling 40 million people and 90 percent of the population by 1980-(Tufts, 1998, ¶10). HMO's over the last two decades have expanded to become the dominant health care choice in the United States. This drastic increase over the last two decades can be attributed to a combination of two trends; both the rapidly increasing costs of health care and the growing dissatisfaction that patients were developing with the most popular fee for service plans in existence at the time. .
Managed care is a health care alternative that offers customers a fixed co-payment for doctor office visits and prescriptions, which is usually considerably less than that of typical fee-for-service plans. In exchange for the reduced co-payments, customers give up their rights to seek health care providers outside their managed care network. The rationale behind managed care is that physicians can not prescribe unnecessary tests and procedures as had occurred under fee-for-service plans. .
"For much of the 20th Century, physicians in the United States practiced what Dranove called "Marcus Welby- medicine, in which general practitioners worked in individual office, and patients selected their own practitioners, who diagnosed problems and prescribed treatments.
