MEDICARE HMOs: Exodus Continues at Record Pace
With HMOs fleeing the Medicare program at breakneck speed, the Clinton administration announced today that 933,687 elderly and disabled patients will lose insurance coverage, a number substantially greater than the 711,000 estimated by the American Association of Health Plans last month, the New York Times reports. Medicare beneficiaries will have until Jan. 1 to enroll in new health plans or return to traditional Medicare coverage. In the last two years, 734,000 Medicare patients have lost coverage -- 407,000 in 1999 and 327,000 this year -- with HMOs exiting markets in 400 counties in at least 33 states. According to HCFA, 65 HMOs decided not to renew their Medicare contracts next year, and 53 others will withdraw from selected counties.
Finger Pointing Continues
While the health plan industry and the Clinton administration both lament the Medicare HMO exodus, they disagree when defining the cause (Pear, 7/25). HHS Secretary Donna Shalala argued that "corporate greed" spurred the pullouts, but industry officials blame the government for "overregulating and underfunding" the program (Pipes, Investor's Business Daily, 7/25). "The fact that almost one million Medicare beneficiaries will be affected ... reinforces the magnitude of this crisis and the need for action now," Karen Ignagni, president of the AAHP, charged, adding, "It's time for Congress and the administration to put aside partisan politics" (Bernstein/Rosenblatt, Los Angeles Times, 7/25). She criticized the administration for "underestimat[ing] the problem for two years" and urged Congress to boost direct payments to HMOs by $15 million over the next five years. Although administration officials disagree, contending current payment rates remain "adequate or more than adequate," they have repeatedly pushed Congress to pass President Clinton's proposal to compensate HMOs for providing prescription drug benefits, payments HMOs do not receive under current law. Backing Clinton's plan, HCFA Administrator Nancy-Ann Min DeParle argued that the government must take action to save the flailing program. "The volatility of the Medicare managed care market underscores the need for Congress to enact the president's legislative proposal to modernize and strengthen Medicare," she said (New York Times, 7/25).