Over Managed Care
By Dan Froomkin
Four years ago, fears of faceless federal bureaucrats making important medical decisions sunk the Clinton administration's national health insurance initiative.
Today, many Americans find their medical decisions are being made by faceless bureaucrats of a different sort. These bureaucrats represent managed care health plans instead of the government.
Once celebrated as forward-thinking, super-efficient organizations that would put a needed squeeze on doctor and hospital bills, HMOs and other managed-care plans are enduring a wicked backlash, frequently accused of irresponsible and potentially dangerous penny-pinching at the expense of patients stripped of medical options they once took for granted.
In 1996, about 60 percent of Americans were enrolled in some sort of managed care health plan (the most common of which are health maintenance organizations, or HMOs, and preferred provider organizations, or PPOs). That's up from 36 percent in 1992. The increase is due in large part to employers shifting their workers away from the traditional and considerably more expensive "fee-for-service" health insurance plans. (About 16 percent of Americans have no health insurance at all.)
Candidates in 1998 responded to public furor against managed care with proposals establishing certain "patients' rights." Both parties are promising action on the issue, but Republicans and Democrats are offering different prescriptions.
Both parties claim they support the idea of codifying what people should get from their health plans, and polls show that no other action by Congress would be as welcomed by the American people.
Driving the debate on the issue is a Democratic proposal that would establish "patients' rights" to:
Appeal denials of services and benefits by a health plan to an outside body;
Access a specialist when needed;
Use doctors outside the plan (for a larger fee);
Use emergency services if the symptoms justify alarm, even if the problem proves not to be a genuine emergency;
Get an understandable explanation of coverage rules;
Sue an employer-sponsored health plan for damages.
Senate Republicans killed this plan in October, saying that while they too favor patients' rights, the Democratic bill called for too much regulation and would have made HMOs too vulnerable to lawsuits. Democrats vowed to fight for the bill again in 1999.
All this comes when the managed care industry is struggling. Many health care plans held their rates at unprofitable levels during a long industry price war in an attempt to grab market share.
Now they want to increase their profitability, analysts say. However, they have already reaped the easy savings by squeezing payments to doctors and hospitals. Other ways of saving money further reducing hospital stays, restricting patients' access to specialists and expensive medical tests, limiting patients' choice of physicians are ones patients are coming to hate.
The Change in Patient Care
Most Americans used to have fee-for-service health insurance, where patients can choose their medical service provider and the insurance company pays a percentage of the fees, after a deductible. This creates various financial incentives: for patients, to see a doctor only when absolutely necessary; for doctors, to provide more tests and treatments rather than less.
In managed care, patients pay vastly reduced fees to see their "primary physician" but they can't see specialists or other medical service providers without their primary physician's approval. For patients, the financial incentive encourages casual doctor visits for such things as preventive care, but makes it almost impossible to choose medical options not approved by the primary physician. And for doctors, watched over by plan accountants, the incentive encourages minimum tests, referrals and hospitalizations.
Both systems have their advantages, and no consensus exists among medical researchers about whether consumers are being served better or worse in the managed care environment than they were in fee-for-service.
Dan Froomkin can be reached at email@example.com