The rates of increase in health insurance premiums have declined steadily since 1989, however. In 1995 and 1996, they were below the rate of general inflation as measured by the consumer price index. Pundits have argued that recent declines in the profitability of many managed-care firms will lead to a new round of escalating premiums. The move to managed care has spawned all sorts of changes. The once dominant indemnity insurance plans now have only a quarter of the private health insurance market.
Small employers are now almost as likely as large ones to offer a managed-care plan.
Employers are finding ways to structure premium sharing to allow workers to see the savings from choosing less expensive plans. Hospitals are competing on a price basis. Providers who once complained about how poorly Medicaid pays now worry about losing their Medicaid contract. Where once we worried that hospitals would not work cooperatively, now we worry that consolidation in the industry will give networks of providers too much market power. We are even beginning to rethink what we mean by a health care market.