MEDICARE HMOs: To Leave or Not to Leave?
Members of Secure Horizons, the largest Medicare HMO in the Inland region of San Bernadino and Riverside counties, must decide by January 2000 whether they are going to switch providers due to an expected rise in coverage costs and a decline in benefits. "HMO executives blame the charges on two key issues: Cost constraints imposed by congressional budget cutters, and soaring prescription drug costs," the Riverside Press-Enterprise reports. In prior years, intensified competition for enrolles forced many companies to offer high benefits at low costs to attract patients; "California had one of the richest benefit packages in to country," notes Lisa Rubin, CEO of Blue Shield of California Medicare HMO. Drawn by these attractive benefits, more than half of the 370,000 Medicare recipients in Riverside and San Bernadino counties are enrolled in Medicare HMOs -- giving the Inland region the second highest percentage in the nation, second only to a county in Oregon. Until now, Inland Medicare patients have been cushioned from much of the financial crisis due to their location -- Southern California HMOs receive higher Medicare payments than other parts of the country and the region is one of the most competitive "medical marketplaces," as doctors and hospitals offer substantial discounts to attract insurance plans and patients. But HMOs report that they can no longer sustain such a burden -- while the cost of providing care continues to grow at 5% to 6% each year, the payments rise at a rate of only 2%. Prescription drug costs have been a major "profit-killer" for many HMOs; Aetna spokesperson Bobby Pena said, "Pharmacy costs are one of the strongest factors in health costs rising." Secure Horizons officials concur, stating that the majority of the increased premium costs will help defray drug costs, which have been rising at 18% per year.
Move It or Lose It
While Secure Horizons officials say that they have little recourse than to raise prices, they worry that "some of its 84,000 Inland members will balk at the higher charges and switch to other health plans. Secure Horizon Vice President Kathy Feeny warned, "If too many Secure Horizon patients quit, the HMO might have to pull out of the Inland region altogether." But switching plans might not be so easy; other Medicare HMOs have announced that they will also expect seniors to pay a co-payment for various services. A letter from the Beaver Medical Group, which recently implemented a fee for doctor visits, stated, "These [costs] are necessary to provide continued stability and longevity in the Medicare program and to ensure the availability of high quality health care in the community." Despite the rise in costs, many seniors recognize that it is still better to pay higher fees than rely on Medicare alone. As one senior put it, "There's no free lunch anymore. You have to pay for something" (Beeman, 10/28).