HEALTH CARE REFORM: HMOs Out, Universal Coverage In?
Dr. Eli Ginzberg of Columbia University writes about "the uncertain future of managed care" in this week's New England Journal of Medicine arguing that "the best alternative" is government-sponsored universal health care. He chronicles the recent financial woes of managed care giants such as Kaiser Permanente, which posted record losses of $270 million in 1997, and Oxford Health Plans, whose stock lost 70% of its value the same year. He also notes that many HMOs are "heavily leveraged" and argues that a stock market downturn could drive many to bankruptcy, jeopardizing "the health insurance coverage of many millions of middle-class citizens." Ginzberg asserts that the 10% to 15% savings associated with transitioning patients from fee-for-service to managed care "are over." In addition, he says HMOs have already enrolled the healthiest and most accessible Medicare and Medicaid beneficiaries, and questions whether managed care can continue to maintain profits while enrolling difficult-to-reach members and providing quality care. With double-digit premium hikes on the horizon, Ginzberg warns that HMOs may lose their biggest ally -- employers -- just as lawmakers prepare a legislative onslaught of managed care regulation to appease frustrated patients and doctors. Finally, he predicts that steeper premiums will lead employers to either cut coverage or force employees to shoulder more of the burden.
What Can Be Done?
Ginzberg argues that government officials have little appetite for reducing skyrocketing health costs by cutting excess acute care hospitals, restricting the supply of new doctors or slowing the introduction of expensive new technologies. "With up to one in three Americans vulnerable to the loss of high-quality health care insurance," Ginzberg believes "legislators may find it easier to provide universal coverage than to pursue any alternative policy." He notes that current government health care expenditures account for 7% of gross domestic product -- about what Britain spends to provide health care for all of its citizens. He concludes that "the best alternative is for government to provide essential coverage to the entire population and then let persons who want more and better care to cover the additional costs out of their own pockets, through privately purchased insurance, or through employer benefits" (1/14 issue).