Her eyes swollen and her sinuses throbbing, Yvette Jones went to her usual pharmacy one February day, handed over a prescription for allergy medicine and her insurance card, and got a surprise. The white card, given to her by HMO Health Ohio, didn't work anymore.

After years of treating Jones and other Medicaid patients across Cincinnati, the health plan had dropped out of the government insurance program for the poor, abandoning more than 9,000 people. Its defection last winter was part of a chain of obstacles that has daunted -- and finally defeated -- Ohio as it has tried to weave poor patients into managed health care in this southwestern corner of the state.

In the spring of 1995, when Ohio told most of the people who receive Medicaid here that they must join a private health maintenance organization, patients had a choice of a half-dozen health plans. By early this year, all but one of those HMOs had disappeared from the program, leaving the state no alternative but to let 30,000 people here get out of managed care if they wanted to. Most have fled.

The collapse of managed-care Medicaid in Cincinnati offers sobering lessons, because experiments such as this one are part of a central social policy innovation of the 1990s as governments have turned to the private sector to deliver major social programs. Some 45 states have steered roughly half the nation's 40 million Medicaid recipients into HMOs and similar arrangements.

States have latched onto managed care in hopes of improving on the original approach to Medicaid, dating to the 1960s, in which patients had been free to visit any doctors or hospitals they could find. But often many doctors who treated middle-class patients were unwilling to accept Medicaid. Many patients lacked a regular source of care, roaming through a kind of health care ghetto of expensive hospital emergency rooms and threadbare community clinics when their neglected medical problems flared up. And by the late 1980s, spiraling Medicaid costs were twisting state budgets out of control.

By relying on HMOs, the thinking was, states could save money and usher patients into the medical mainstream, making sure they got reliable preventive care that could avoid costly complications later on.

But the lessons from Cincinnati, and stumbling blocks that other communities have bumped into, suggest that this dream of a new golden era of health care for the poor may be proving partly hollow. While some states appear to be finding success, much of the on-the-ground experience with this broad effort at health reform suggests that poor patients are not entirely welcome in the private medical marketplace, that managed care is not as economical as states had hoped, and that giving memberships in HMOs does not guarantee changes in patients' ingrained habits of medical care.

Virginia, which required most Medicaid patients in Tidewater to join managed care three years ago, was unable to expand into Northern Virginia by last winter, as planned, because not enough HMOs were willing to take part. Maryland, which placed 330,000 people on Medicaid in HMOs in 1997, discovered the experiment yielded only one-third of the $50 million in savings that state officials had expected the first year.

Indeed, health plans' decision to leave Medicaid in Cincinnati is part of a pattern emerging across the country. For every commercial HMO that began accepting Medicaid patients last year, six HMOs dropped out, according to a new study. And increasingly, the health plans that remain are designed solely for Medicaid patients, often funneling patients into the same clinics and hospitals that treated people in low-income neighborhoods before managed care came along, according to the study by Mathematica Policy Research Inc.

In part, these trends reflect a miscalculation by states. Some have been so eager to spend less on Medicaid that they pay HMOs less than they are willing to accept, thus driving away the health plans on which their reforms depend. At the same time, those plans often make for unreliable partners, tending to be driven by profit motives and ill-equipped for the special difficulties of caring for poor patients.

The resulting turbulence in Cincinnati has left many health experts here disillusioned. "It sounds good, but the people who are on Medicaid aren't able to be plugged at this point into a private system," said Judith Daniels, the longtime medical director of the Cincinnati health department. "It is a theory that doesn't work."

The bleak turn of events here is particularly striking because Ohio had been widely regarded as a leader in the march toward managed care for the poor.

As long ago as the 1970s and early 1980s, a few states had begun flirting with HMOs, allowing Medicaid patients to sign up on a voluntary basis. Ohio has done that for years. But a decade ago, Ohio also became one of the first states to go considerably further, winning permission from the federal government -- which shares responsibility for Medicaid with the states and pays half the bills -- to compel certain Medicaid patients to enter managed care.

The experiment began in Dayton. A few years later, as Ohio launched a plan to bring managed care to every corner of the state, Cincinnati came next. And the new way of dispensing care appealed at first to at least some of the people it was meant to help. "I picked the doctor I wanted to go to. It worked pretty well," recalled Michele Simms, 32, who lives on the city's west side.

Simms took two sons to an optometrist for their first eyeglasses and brought her youngest child for an overdue trip to the dentist. And unlike old-fashioned Medicaid, she discovered, her HMO would call a cab to give her a lift to medical appointments and would pay for Tylenol, cough medicine and other over-the-counter drugs.

Yet tensions between the state and its new health care partners soon were evident. For one thing, HMOs complained that Ohio and the federal government heaped on bureaucratic requirements. It would take at least a month each time Health Power Inc. needed to get state approval for all the written material it wanted to mail to Medicaid patients, recalled Bernard F. Master, chief executive of Health Power, an HMO that state regulators drove out of business last winter because its finances were shoddy. And state legislators passed laws that dictated how long health plans must pay for women to stay in the hospital after giving birth and made them give drug tests to all pregnant women.

More ominously, plans jousted with the state over how much money they deserved. In the mid-1990s, state Medicaid managers discovered they were paying HMOs more than the federal government allowed. Then they decided that, as they were giving health plans a windfall of thousands of new patients, the state should get some savings too. "We weren't looking to make a killing," said Ohio's Medicaid director, Barbara Edwards. "We were just trying to seek some financial advantage from this arrangement."

From 1994 to 1996, the state cut payments to HMOs three times, the last one reducing rates by 6 percent. In Cincinnati, where Medicaid costs had been higher than elsewhere in the state, the final cut was especially deep -- 15 percent.

A few months before that last cut, Daniel A. Gregorie, chief executive of Choice Care, a respected mainstream HMO that had taken in more Medicaid patients than any other plan in Cincinnati, arranged a personal meeting with then-Gov. George V. Voinovich (R).

"We've been really committed to serving the Medicaid population, [but] you pay providers terribly," he said he told Voinovich, now a U.S. senator. If the state went through with its plan, Gregorie told him, Choice Care would drop out.

That June, Choice Care became Cincinnati's first HMO to leave. The following April, United Health Care followed suit.

The experiment was fraying in other ways. The state was largely thwarted in exporting managed-care Medicaid beyond all but its largest cities. And in Cincinnati, HMOs were eliminating some of the services that patients appreciated the most. Brenda Howell telephoned Health Power, her HMO at the time, to arrange for a cab ride so that her daughter, Kara -- 14 years old and several months pregnant -- could get her first prenatal checkup. "I loved . . . that special taxi service," Howell said. "They said they didn't do that anymore."

And some hospitals and clinics stopped accepting patients from certain HMOs, which were coping with the state's cutbacks by, in turn, paying them less. University Hospital, traditionally the largest source of hospital care for Medicaid patients here, cut off 10,000 patients when it severed its relationship with HMO Health Ohio.

And one by one, health plans continued to defect. Finally on March 1, with Cincinnati down to a lone HMO -- thus violating a federal promise that patients will be required to enter managed care only if they are offered at least two health plans -- patients were given a new choice. They could either join the only plan still willing to accept them or switch back to an old-style Medicaid card that lets them roam among any doctors, hospitals or clinics they can find. The HMO, the Cincinnati Area Health Plan, has picked up no more than 3,000 patients, about one person in 10.

Ohio has not given up. The state is asking for a federal exemption to herd Cincinnati's Medicaid patients into that single health plan. It has not yet gotten an answer. In the meantime, the city's health commissioner, Malcolm Adcock, laments that, for now, the city is left with a system "that is once again haphazard, uncoordinated and leaves patients to their own devices as to where to seek care."

In a perverse way, the disruption has been less dramatic than it appears on the surface, for the simple reason that the experiment was not entirely successful in changing the way patients get care.

Choice Care's Gregorie, now an independent health consultant, said he saw firsthand how difficult it can be to alter patients' habits. Eager to use health services more efficiently and make patients healthier in the process, the HMO hired a special team to sift through its data from local hospitals and track down Medicaid patients who had shown up in emergency rooms with complaints involving asthma, high blood pressure and diabetes -- diseases that seldom require hospital visits if people visit their own doctors regularly. Even though the team helped those people make appointments with their doctors, Choice Care's Medicaid patients continued to make trips to the emergency room four times as often as its patients who had private insurance.

Even more surprising, only about one of every 10 of its Medicaid patients took advantage of a Choice Care policy that required every one of its doctors -- including those with the fanciest suburban practices -- to treat people on Medicaid. Most patients ignored that opportunity, Gregorie said, and relied instead on familiar clinics and "the pattern they historically had used -- care on a crisis basis."

From patients' point of view, however, the advantage of trekking to an unknown doctor in an unfamiliar part of town seemed less obvious. Months before Yvette Jones was turned away from her pharmacy, she and her husband, Ronald, had been impressed at first by the glossy booklet listing doctors and dentists available to them under HMO Health Ohio. But as they looked more closely at the list, Ronald Jones recalls wondering, "How are you supposed to pick a doctor? How do you know their credentials, how compatible they are with you?"

So the couple left the decision to the county's Department of Human Services, which assigned them and their five children to a clinic near their neighborhood of Millvale. When he went to see his own physician at that clinic every three months to have his blood pressure checked, Ronald Jones said, "It was like I'm a new patient. The doctor couldn't say, `Oh, hi, there is Mr. Jones.' "

But the biggest problem, the Joneses and other patients discovered, was that their HMOs refused to cover bills that old-fashioned Medicaid probably would have paid. Last December, Yvette Jones called an ambulance to rush her 43-year-old husband to University Hospital with what turned out to be a mild heart attack. He stayed for two days, then landed there again two weeks later when he fell unconscious on New Year's Day.

Today, the Joneses are stuck with nearly $5,000 in hospital bills that HMO Health Ohio refused to cover, because they had not called the HMO for permission in advance.

When their HMO abandoned them last winter, the family retrieved an old-fashioned Medicaid card and started using a clinic they like that is run by the city health department. The day her pharmacy told her that the HMO card didn't work, Yvette Jones went across town to the county's human services department, where a Medicaid enrollment worker asked her whether she would like to switch to the one HMO left. Jones vividly remembers her reply. "My words were, `Hell, no.' "

A Lone Survivor

Here are the Medicaid managed care plans that served Hamilton County, Ohio, in the late 1990s and what happened to the patients when a program folded. One plan remains.

HMO Health Ohio

Decided to withdraw from the program in Hamilton County and disenrolled 9,354 patients on Jan. 31, 1999.

Choice Care

Transferred patients to Health Power on July 1, 1996.

Total Health Care

Transferred 1,651 patients to DayMed on Dec. 31, 1996.

United Health Care

Transferred 2,019 patients to Dayton Area Health plan on Dec. 31, 1996.

DayMed

Failed to meet minimum enrollment, transferred 4,373 patients on Oct. 1, 1998.

Health Power

License revoked, 12,428 patients disenrolled on Jan. 31, 1999.

Cincinnati Area Health Plan

The last plan standing, it had 10,906 patients enrolled in December.

SOURCE: Ohio Department of Human Services

CAPTION: FEWER PLAYERS (This graphic was not available)