HMOs' Rise Driven by Government, Not Market Unbeknownst to most, Congress has essentially mandated managed care for everyone. HMOs' Rise Driven by Government, Not Market By Twila Brase Dissatisfaction with HMOs has led some to call for increased regulation of the HMO industry.
Government officials express concern for patient protection and access to health care.
Yet government action did much to encourage the spread of HMOs'and government action continues to steer people into HMOs. HMO Act of 1973 Unbeknownst to most, Congress has essentially mandated managed care for everyone. In response to escalating costs in the Medicaid and Medicare programs, Congress looked to HMOs for assistance. In 1973, it passed the HMO Act which offered government subsidies to HMOs and gave nonlicensed HMO executives the power to challenge the medical judgment of licensed physicians. The Act also mandated that all businesses with more than 25 employees offer HMOs as a health care option.