RURAL HEALTH: Mass Exodus of HMOs Leaves Providers, Residents in a Lurch

      "The exodus of commercial HMOs from rural markets is accelerating rapidly," leaving rural health care providers to deal with "increased unpaid services and decreased negotiating power with the few (or only) remaining insurer(s) in the local market," the California State Rural Health Association's (CSRHA) Rural Health Bulletin reports. Consequently, a number of rural providers, particularly hospitals, have shut down or are on the verge of closure, further reducing access to care. According to the report, only about 2% of rural Medicare beneficiaries in California have a choice of HMOs. Attracting more managed care companies to such areas "is not going to be an easy task," as the wave of for-profit conversions has increased incentives to abandon the low-profit markets. Also, as "HMOs have become the dominant vehicle for health insurance, they have fewer low-risk, low-cost populations to enroll. ... This makes it attractive to eliminate high-cost, high-risk business," such as rural populations, which tend to be "older, sicker, poorer ... and engage in more unhealthy behavior." However, several possibilities offer hope of either enticing HMOs back to rural areas or providing other sources of coverage to rural residents. A measure approved by the state Legislature in October ordered a two-year state HHS study of options for providing universal health coverage. The state Senate Insurance Committee also is investigating the issue. Privately, a CSRHA study found that a statewide, commercial HMO product would be "feasible under optimal conditions," although a Medicare product would require major changes in federal funding. In addition, direct contracting with health providers may also be an option (Lewis, Jan./Feb. issue).