Prognosis is bright for health giants. (Massachusetts' new health insurance legislation favors managed care than indemnity insurance) (Industry Overview)

In the cradle of liberty, freedoms of many kinds have long been assured in Massachusetts, whether it be freedom of speech, freedom of religion or freedom of political preference. And for the most part, residents needn't be concerned about losing such rights.

But under Chapter 495, the new hospital-finance legislation passed last month, the freedom to choose one's own doctor or hospital seems to be the biggest casualty in the war against sky-rocketing health-care costs. With the new emphasis on negotiated discounts, industry observers say the bill could hasten the demise of the indemnity--or fee-for-service--type of insurance product.

"Indemnity insurance is going to be very rare over time and probably very expensive," said Robert Hughes, executive director of the Massachusetts …