Question

What was the major reason that employers, blue cross/blue shield plans, and commercial insurance companies moved private, employer-sponsored group health insurance from an indemnity/service plan model to a managed care model between 1988 and 1996?

Answer 1

The major reason for the transition from an indemnity/service plan model to a managed care model in private, employer-sponsored group health insurance was to address the issue of adverse selection.

Step-by-step explanation:

Employer-sponsored group health insurance from an indemnity/service plan model to a managed care model between 1988 and 1996 was to address the issue of adverse selection. Adverse selection occurs when individuals with higher health risks are more likely to seek insurance, leading to higher costs for insurance companies. By implementing a managed care model, insurance companies could mix together a group of people with varying health risks, reducing the risk of attracting only those with high risks and helping to stabilize insurance costs.