CALIFORNIA HMOs: RETURN TO PATIENT CARE EXAMINED
A new survey of managed care companies in California "showsThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
a wide difference" in the companies spend on patients, SAN
FRANCISCO CHRONICLE reports. According to the California Medical
Association (CMA) survey, the 15 largest California HMOs spent,
on average, "82.6 cents of each health care dollar on medical
care during the last fiscal year." Kaiser Foundation Health
Plan, the largest HMO with almost five million enrollees, topped
the list, "plowing back 96.5% of revenues into medical care."
Kaiser was followed by Prudential Health Care Plan of California,
with 87.4% of revenues going back to care and CIGNA HealthCare of
California, with 86% being put back. "At the bottom of the list"
of the 35 HMOs surveyed, Chinese Community Health Plan,
"reportedly put just 72.3% of revenues" back into medical care.
CaliforniaCare Health Plans, owned by WellPoint Health Networks
"and marketed under Blue Cross," returned 74.3% of revenues in
health care, while Foundation Health gave back 77.4%.
PROMISES, PROMISES: "The promise of managed care was that
it would make the health care system more efficient by removing
administrative waste and inappropriate care without sacrificing
quality," said Dr. Jack Lewin, CEO of the medical association.
He continued, "But in reality, in the for-profit era, we see some
contradictions. Some administrative costs seem to be rising."
CHRONICLE reports, however, that the largest HMOs decreased their
overhead costs slightly over the past three years. The "top five
HMOs have raised the amount of premiums going to health care to
83.7% from 83.5%."
COUNTERPOINT: Cynthia Coulter, a WellPoint spokesperson,
said, "The survey is flawed. It ignores the fact that more than
half our California enrollees are served by our preferred
provider organization, not HMOs, and that we serve some small
groups and individuals on the high-risk end." CHRONICLE reports
that both "factors tend to drive up administrative costs." CMA's
Lewin conceded that the survey is "not perfect," because "it does
not consider some factors that affect operating costs, such as
whether managed care groups serve lots of small businesses, have
merged or entered new lines of business." However, Lewin said
that the survey is one of the few ways "for businesses and
consumers to evaluate how their health care premiums are being
spent" (Sinton, 2/22).