Of Course You Don't Like Your HMO
Given the increasingly angry
complaints lodged against managed-care health plans by consumers, you'd think
that the plans would be losing business. Instead, managed-care enrollment is
climbing. A study in this month's Health Affairs explains why: Bosses
decide what health plan you will have, and more of them are deciding that you
will have managed care, like it or not. Besides explaining why competition and
consumer ire aren't slowing the managed-care juggernaut, these findings also
suggest that tougher regulations are unlikely to make insurers serve patients
better.
Managed-care programs, which include health-maintenance organizations and
preferred-practice organizations, limit member patients to specific doctors and
hospitals. The goal of the plans, of course, is to hold costs down. HMOs are
the most restrictive plans, only covering patients who see their specified care
providers. PPOs are the least restrictive, offering coverage with minimal
payments if patients visit the plan's doctors, and with larger payments if they
go outside the network for care. Only old-style "indemnity" insurance gives
patients uniform coverage no matter where they go. Nowadays, HMOs account for
coverage of 50 percent of privately insured workers--and that number is rising.
Only a quarter of all workers have indemnity insurance.
What patients hate about managed-care plans are
cost-cutting mandates that shorten hospital stays and doctor visits and make it
difficult for patients to see specialists. (No wonder popularity polls reveal
that only tobacco companies rank lower than managed-care programs.)
Increasingly, patients and their allies are seeking legislative
remedies--currently, more than 1,000 bills that would regulate managed-care
plans are pending in state legislatures, 80 in California alone. And early next
year, President Clinton will introduce his own legislative package.
Typically,
the proposals loosen the restrictions. Already in effect are new federal laws
requiring all insurers to pay for two-day stays after uncomplicated childbirth,
and for four-day stays after Caesarean sections. Many states are now
considering bills that would stipulate two-day stays after mastectomies, direct
access to obstetrician/gynecologists without a referral, and automatic coverage
for almost any emergency visit.
But what about hospital stays after heart
surgery or a stroke? And after appendectomies, prostate operations, pneumonia?
We don't really want the government directing our care any more than we want
insurers to. What's more, piecemeal regulation is bound to fail. If an
insurer's priority is cheap health care, it will find a thousand other
unpalatable ways to economize.
Political
conservatives and the managed-care industry argue that the market should be let
alone to sort things out. They believe that the managed-care backlash is
fomented in irrationality. The same consumers who whine about managed care
refuse to pay the extra cost of indemnity insurance. In 1996, average family
coverage costs under managed care were $5,071, and $5,388 under indemnity plans
(plus deductibles and copayments were usually higher, too).
But fewer workers are given that choice today, according to
the Health Affairs study from consulting company KPMG Peat Marwick. The
study found that 80 percent of small- and medium-sized companies that give
workers health benefits offer just one plan. Forty-seven percent of large
companies offer no choice of plan either. What's more, employers are
aggressively switching their workers to managed care. In 1988, smaller
companies gave few employees a choice, but 92 percent offered indemnity
insurance. Now only 33 percent offer indemnity. Even the hospital where I
practice medicine dropped its Blue Cross indemnity plan and now offers managed
care exclusively.
Employers
mainly pick insurers on the basis of price, and often switch plans in pursuit
of the lowest cost. So we shouldn't be surprised that patients aren't happy or
that insurers aren't bending over backward to please them. Employers are the
consumers in the health-care-insurance marketplace, not the patients. It's like
when your mother picked your clothes for you. The only one happy with what you
got was your mother.
Employers resist letting some workers pick more
expensive plans and cover the extra costs themselves because most insurers
insist that companies--especially small companies--deliver all their employees
to the plan. Also, most employers would rather send one big check to their
insurer each month than deal with the paperwork hassle of a bunch of different
insurers.
Lost in
the managed-care rumble is this question: Why do employers provide health
insurance in the first place? After all, they don't offer employees car
insurance. Health insurance became a standard benefit during World War II. Wage
and price controls then in effect prevented employers from giving raises, but
because the government regarded health insurance as a tax-free benefit,
employers used it to fatten compensation packages for workers. If car insurance
were a tax-free benefit, it wouldn't be surprising to find employers picking
low-cost insurers who make you visit "preferred" mechanics and skimp on
coverage for Land Rovers and minivans. Angry consumers would complain about
cheapo car care. To appease consumers without upsetting the business lobby,
legislators would probably require overnight stays after brake and lube
jobs.
The most straightforward way to put choices back into
families' hands would be to sever the connection between health insurance and
work. If health benefits were taxed as income, people would promptly demand
that the cash be paid directly to them and that they be allowed to choose their
own insurance. Insurers would then have to cater to their needs. Short of that
radical change, effective legislation should be passed to increase choices for
employees. Some states have established insurance-buying groups that employers
can join. These groups give workers a selection of plans and reduce paperwork
hassles for employers. Legislation could expand such groups. Some suggest that
the law require employers to offer both a managed-care plan and an indemnity
plan, as it did in the 1970s when HMOs were first created.
This week, the president's
advisory commission drafting his consumer-protection proposals endorsed a host
of patients' rights, including the right to appeal mistreatment by insurers.
But employers on the panel scuttled all concrete measures to return choice to
consumers. The new rights are nice enough; they'll move consumers a few seats
forward on the bus. But employers are still driving, and that's all that
counts.
