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Editorials
Monday, April 3, 2000Managed care is
producing resultsHEALTH maintenance organizations, better known as HMOs, have acquired a nasty reputation for putting profits above health care -- so much so that Congress is working on legislation to make it easier to sue them. If that reputation was once deserved, however, it no longer seems to be so.The issue: The managed care industry is helping to improve the nation's health while controlling the cost of health care.
Writing in the New Republic magazine, Gregg Easterbrook reports that several large HMOs have eliminated most precertification requirements and now allow patients to go directly to specialists without the approval of a "gatekeeper" -- two of the main sources of patient complaints. In addition, he writes, denials of claims appear to be less of a problem than they were early in the 1990s.
Despite the industry's poor image, the health-care industry's performance is in fact improving. Americans are living longer; serious illnesses including heart disease, stroke, hypertension, AIDS and most forms of cancer are declining.
Moreover, Easterbrook writes, the cost of health care has stabilized -- the goal that HMOs were designed to achieve after decades of startling increases.
In 1993, health care consumed 13.7 percent of the gross national product and was still climbing; there were projections it would reach 18 or 20 percent by 2000, which could have meant steep increases in insurance premiums. But by 1998 the rate was down to 13.5 percent, and managed care, by tightening cost controls, deserves the credit. Big HMOs use their bargaining power to negotiate discounts with doctors and hospitals.
Even with the HMOs' emphasis on cost containment, patients rarely have to wait for treatment. Easterbrook notes that in the Canadian health system there is a median wait of six weeks to consult a specialist for nonemergency conditions and a wait of 11 weeks for a nonemergency MRI. Many Western European health systems have similar waiting periods -- but not the United States. Even under managed care the U.S. has far more hospital beds, specialists and high-tech equipment per capita.
Easterbrook found no evidence that managed care has resulted in rationing of health care. Denials of treatment usually involve experimental procedures of questionable merit. Expensive but proven procedures, such as bypass surgery and organ transplants, are routinely paid for by HMOs.
It turns out that managed care has produced the desired result of controlling costs without impairing health care that inspired Hillary Clinton's efforts to develop a federal plan. Clinton's program sank without a trace in Congress but the industry went ahead anyway under free-market conditions, without federal legislation and the inevitable increase in red tape.
The HMOs have proved that managed care works. There is little need to strengthen patients' rights to sue, which would generate litigation costs and higher premiums. Independent arbitration panels could do the job faster and cheaper.
Rather, the need now is to find ways to extend health care to the 43 million Americans who have no health insurance.
State retiree health
benefits need cuttingTHE Legislature ought to bite the bullet and end the practice of having the state and counties pay medical benefits for government employees' dependents after they retire. Governor Cayetano, who initiated the proposal, said restrictions are needed because the cost of employee health benefits is "increasing at a rate which is beyond our means."
That rate of increase is alarming. It's predicted that health insurance premiums for state and county workers and retirees could approach $1 billion in 13 years. Last year the state and counties paid $267 million in health insurance premiums.
The Senate has come up with the idea of using money from the Employees Retirement System to help pay for health coverage for retirees -- and avoid making the proposed restrictions on benefits.
But House Speaker Calvin Say correctly calls the proposal "shibai" and warns that he will let corrective legislation die rather than accept the Senate plan.
Currently the government workers and retirees' medical coverage is paid in separate ways, partly by the Public Employees Health Fund, the other by plans offered by the government employee unions. The state auditor has criticized the dual systems as helping to drive up the cost of the premiums the state and counties pay.
Both the House and Senate propose to combine the systems and create a single program, which makes sense. Having one larger pool of insured could give the new fund leverage to obtain favorable rates.
But dipping into the retirement fund as the Senate proposes would be irresponsible.
The fund was never intended to pay for health care. And such action might jeopardize the system's federal tax-exempt status.
The Legislature should face the fact that retiree health benefits -- which are far more generous than those in the private sector -- must be trimmed, even if that means incurring the displeasure of the unions.
Published by Liberty Newspapers Limited PartnershipRupert 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
