SANTA BARBARA COUNTY: Health Authority Explores Nonprofit Medicare HMO Plan

      The Santa Barbara County Health Authority board decided last week to look into creating "a homegrown, low-cost, nonprofit alternative to commercial Medicare HMOs." The Santa Barbara News-Press reports the board decided to "launch a $50,000, six-month study into whether it is financially feasible to step into the Medicare HMO market with a locally based nonprofit agency." The feasibility study is scheduled to be completed and ready for the board's scrutiny by July. The board will do actuarial studies and hire a firm to "crunch the numbers," according to Bob Freeman, deputy executive director of the agency. The News-Press reports that the board's decision was prompted by "rampant fear among many seniors that they'll soon be abandoned" by their commercial Medicare HMOs. Many HMOs statewide are pulling out of the HMO market because they say the federal reimbursement rates are too low to make a profit. But the Health Authority "is hopeful its not-for-profit status can change the scene for the better." According to Freeman, a nonprofit HMO could "divert the money a commercial HMO would set aside as profit and use it to cushion costs to the customer as well as to pay the doctors and hospitals more." The "big nut to crack," said Freeman, is whether the nonprofit agency could offer a good plan with affordable premiums. Other officials, however, are more cautious. "I would like to see it happen -- if we can do it. And that's the big question," said Martin Seifert, the board member who conceived the idea. Still others think the solution to the problem should be convincing the federal government to increase the reimbursement rates (Green, 1/10).