The collision of economics and politics in Medicaid managed care: reflections on the course of reform in Maryland.

One of the most dynamic areas of health policy is the transition of Medicaid programs to managed care and market competition. Maryland has been a leader in this trend, initiating three different systems of managed care for the Medicaid population during the 1990s as it searched for an ideal plan. The Maryland experience illustrates the complex new demands that policy makers are facing. Health plans are expected not only to deliver budgetary savings, but also to improve the quality of their services and guarantee a place for safety-net providers in their delivery systems. As a result, there is a sizable gap between the original savings projected for the new Maryland system and its actual capacity for cost containment. The apparent collision between economic assumptions and political realities, however, may point the way to a constructive synthesis--a form of managed care that balances economy with important community, professional, and personal values.