Final answer:
Managed health care systems such as HMOs aim to control spiraling healthcare costs by incentivizing efficiency in care delivery. They face challenges such as adverse selection and strive to balance quality, access, and cost in healthcare.
Step-by-step explanation:
Managed health care systems, such as health maintenance organizations (HMOs), emerged as a response to the need for cost control in healthcare spending. These systems attempt to manage costs by setting fixed rates for services and placing healthcare providers on a budget, which incentivizes efficiency and cost-saving measures in patient care.
The fee-for-service model, which reimburses providers for each service performed, often leads to higher healthcare costs. HMOs represent an alternative by reimbursing providers based on patient numbers, allowing them to allocate resources more efficiently.