Friday, December 27, 1996

Protecting consumers
against HMO abuses

MANAGED care is the trend in medicine. More than 50 million workers - 70 percent of the nation's eligible employees - now have heath insurance coverage through managed care. The rapid growth of health maintenance organizations (HMOs) reflects employers' efforts to reduce their expenses for employee health benefits. The trend is evident in Hawaii, with several new HMOs being established in the last year or so to challenge the long-established Kaiser Permanente program.

There is a sharp difference in approach between managed care and the traditional fee-for-service system. Under the former, members pay a fixed fee for health care. The HMO benefits financially by keeping its members healthy and its costs down. Under fee for service, physicians and hospitals levy charges to cover whatever treatment is provided. They can increase their incomes by providing more treatment, not less. This has sometimes resulted in unethical doctors padding their bills by ordering unnecessary procedures.

However, consumer groups fear that concern about cost will govern medical decisions in for-profit HMOs, with the danger of scrimping on treatment. Physicians' groups maintain that the focus on cost conflicts with professional ethics. HMOs say such fears are baseless because they control costs by eliminating unnecessary services. They say they reward doctors not only for controlling costs, but also for providing high-quality care.

The federal government is now addressing this concern. Washington has adopted a policy limiting the types of bonuses that can be paid to doctors as a reward for controlling the cost of services for Medicare and Medicaid patients.

The rules will apply only to HMOs serving patients under Medicare and Medicaid, the programs for the elderly and the poor, but in practice they will set a standard for the entire managed-care industry. The rules do not prohibit HMOs from paying bonuses and other financial incentives to doctors. However, they establish a new framework for regulating such payments.

The new rules come three weeks after the government declared that HMOs may not limit what doctors tell patients about treatment options. Doctors say such "gag clauses" discourage them from discussing expensive treatment options not covered by the HMO.

Just as patients have been victimized by unscrupulous practitioners of fee-for-service medicine, they can be victimized by HMOs. These steps should be welcomed by the industry as well as health-care consumers. They will enhance the credibility of all HMOs by curbing those prone to commit abuses.

South Korean strikes

SOUTH Korea's President Kim Young-sam has the biggest crisis of his administration on his hands, and it's not a confrontation with North Korea. Tens of thousands of striking workers have shut down auto plants and shipyards to protest a new labor law rammed through the legislature. Half a million workers were called out by a militant trade union confederation and a more moderate union group urged another million to strike. Opposition lawmakers occupied parliament in a silent sit-down protest and vowed to stay until midnight Saturday.

The government's apology for its high-handed action hasn't satisfied the protesters. President Kim may have to find a way to rescind the parliament's action to mollify them and get the strikes called off. Massive labor unrest is the last thing the Seoul government needs.

Workers’ comp

THE high cost of workers' compensation has been a major complaint of Hawaii employers for years. Now there is some relief. Insurance premiums have been reduced by 27 percent in the past year. The Cayetano administration says business should realize savings of more than $100 million in 1997 as a result of reform measures now in effect.

Workers who are injured on the job should be provided with appropriate medical care, but abuses of the system by employees and care providers must be eliminated. This is not only a matter of fairness. It is essential to bring the cost of workers' compensation down far enough to make it bearable for Hawaii businesses.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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