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HMOs: The cost of cutting prices
May 23, 1997
Web posted at: 11:46 p.m. EDT (0346 GMT)From Correspondent Jeff Levine
WASHINGTON (CNN) -- While it's widely agreed that health maintenance organizations save money, critics wonder whether those savings are coming largely at the expense of consumers.
Anger at HMOs has generated a consumer and legislative backlash, with an array of reforms proposed to make sure patients really understand their health plans and get the care they need.
However, the HMO industry says big changes aren't necessary.
"HMOs cover more in terms of benefits, their premiums are lower and they require less in the way of out-of-pocket costs for patients," says Susan Pisano of the American Association of Health Plans.
Uwe Reinhardt of Princeton University says the cost-control record of HMOs has been a success.
"Let's not forget [that] in the late '80s, premiums in the private sector rose 15 to 20 percent," he says. "They are rising 4 percent now."
No doubt that's the main reason why the percentage of American workers in managed-care plans is skyrocketing. In 1996, 77 percent of workers were in managed care, compared to just 49 percent in 1992.
But one survey also showed that the patient's average co-payment for a doctor's visit almost tripled in six years. And the stampede to HMOs has led to other changes so subtle they are hard to spot. For example, one tactic is to restrict medicines to an approved list, called a formulary.
"We're seeing some managed-care organizations be very heavy-handed about this approach, not only putting in formularies but actually penalizing doctors who prescribe too much," says John Erb, a health policy analyst.
HMOs also may deny coverage for an emergency room visit that isn't life threatening.
"So on one hand, we are forced to see that patient. On the other hand, you can [retroactively] be denied payment, and that's the quandary," says Dr. Clayton Wheatley of Georgia Baptist Hospital in Atlanta.
And the current wave of complaints may be only the beginning. Health-care costs are starting to creep up again, which means health must either charge more for coverage or whittle away at benefits to save money.
Related stories:
- Are HMOs the wrong prescription for patients? - April 2, 1997
- Poor and elderly do worse in HMOs - October 1, 1996
- Critics say HMOs hiding facts to save bucks - May 31, 1996
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