⁹The quotation refers to movement into Medicare’s set of “managed care” options, but the dynamic was the same in the private sector. Developments within Medicare neatly recapitulated this chapter’s story about privately paid insurance. In the early 1980s, HMOs were allowed to participate within Medicare. The number participating grew slowly in that decade but much more quickly in the 1990s, so by 1997 they enrolled about a sixth of Medicare beneficiaries. Many of its designers expected the Balanced Budget Act of 1997 (BBA–97) to accelerate this trend. But payments to these plans were related to the costs of fee-for-service Medicare. As the BBA–97’s cost controls bit and the private-sector cost controls began to fail, the plans found they could not compete nearly so well with the traditional program. After growing to nearly 18 percent of enrollment by 1999, managed care fell to 13 percent of Medicare enrollees by the end of 2003 (Technical Review Panel 2004, p. 48). For good accounts, see Gold 2001; Grossman, Strunk, and Hurley 2002; White 2003, pp. 251–53. [Return to Text]