Regulating Managed Care: Pulling the Tails to Wag the Dogs

The health-policy airwaves are currently filled with talk of regulating managed care to protect “consumers. ” In the name of “consumer protec-tion ” numerous states have already passed legislation to regulate man-aged care and a multitude of proposed additional state legislation, as well as major bills in Congress, are pending. In this essay I question much or most of this enterprise, concluding that little public good is likely to be attained from regulation of managed care within the confines of our cur-rent market-based, competitive private insurance system (including the spillover effects on major public programs like Medicare and Medicaid and the patchwork of public programs aimed at smaller populations, such as the Children’s Health Insurance Program). The allied culture and institutions of dog-eat-dog are simply too deeply entrenched. The essay concludes by noting briefly that the same may be true in a compulsory, universal system in the United States and by noting that scholars like me who are sympathetic to “consumer protection ” are put into a real dilemma because we must be concerned that managed care regulation serves to legitimate and reinforce a system that is inequitable and pru-dentially flawed.1 We can divide actual and proposed managed care regulation into two groups, one termed procedural and the other substantive. By “pro