HMO COMMERCIALIZATION: ‘Must Good HMOs Go Bad?’

      Today's New England Journal of Medicine concludes a two-part series on the commercialization of prepaid health plans and the continuing "search for checks and balances" in managing and regulating health plans. Written by American Prospect co-editor Robert Kuttner, "Must Good HMOs Go Bad?" offers a thorough overview of how prepaid health plans emerged and evolved over the postwar decades. In the first installment, "The Commercialization of Prepaid Group Health Care," Kuttner observes that "[m]anaged care under market auspices has ... produced a double paradox. The more patients chafe under the constraints of utilization controls, the more they demand a choice of doctors. ... And the more plans try to offer a choice, the further they stray from the systemwide integration, prevention and case management that are the supposed advantages of HMOs." Kuttner concludes the first piece by writing: "The relentless pressure to cut costs will undoubtedly continue. The key question is whether counter-pressures will provide adequate checks and balances." He notes that such "counter-pressures can be generated by informed consumers with a meaningful choice of competing plans, professional ethics, the quality movement, industry self-regulation and the growing bipartisan drive for government regulation" (5/21 issue).

Is Regulation Inevitable?
      In the second installment, "The Search for Checks and Balances," Kuttner looks at managed care regulatory proposals, quality improvement and assurance efforts and other "checks and balances" in prepaid health care. Concluding this piece, he writes: "In principle, checks and balances are possible to prevent the less scrupulous HMOs from leading a competitive 'race to the bottom.' But in practice these mechanisms entail an endless regress of private regulation ... as well as multilayered government regulation and litigation." Kuttner adds: "It was socialism, in Oscar Wilde's famous complaint, that was flawed because it would consume 'too many evenings.' In order to have adequate checks and balances, private managed care in the United States consumes too many of the doctor's evenings and entails too many promoters, marketers, attorneys, underwriters, consultants, reviewers and shareholders -- all taking too big a cut of the premium dollar up front while passing too much of the risk along to the physician. Whether socially motivated HMOs can survive with their ideals intact while competing in this environment remains to be seen" (5/28 issue). Read Kuttner's article online at www.nejm.org.