Changes in the insurance industry have led to changes in the medical services industry, and some companies, such as Humana, are poised to take advantage of these changes. With increased pressure on Congress and employers to reduce medical costs, the medical services industry is receiving strong incentive to provide an alternative to traditional medical care. This research examines recent developments in the medical insurance industry, the managed health industry, and the effects of these changes in the environment on Humana.
Medicare has been one of the primary sticking points in the political process recently. When the federal government faced a shut-down, it did so in part because of debate between Congress and the president on the future of Medicare. However, the government is trying to encourage enrollment in managed care plans, which streamlines its active participation in the process and shares the financial responsibility with the private sector.
In addition, legislation is likely to limit future changes in Medicare hospital rates for patients who are outside the managed care plans, and more restrictions on reimbursements to these patients is also likely in the future (Markey, 1995, p. 662).
As the legislative battle over Medicare continues, several key trends are emerging. It is likely, for example, that physicians and hospitals may gain flexibility to offer their own managed care plans, a process which has already started in several key markets. This will increase the competition for business and reward those treatment options which are the most cost effective. In addition, integrated delivery networks are likely to emerge from this trend. Other physicians may be forced to move their practices to more lucrative markets, or to a different location within their own network.
There is also likely to be an increase in the number of hospital closures, which causes concern in the immediate community, but which mak...