The Boston Globe
August 29, 2001
by Liz Kowalczyk
“Managed-care plans have responded to growing political and consumer pressure by loosening their restrictions for everything from elective surgeries to lengthy hospital stays.”
“But the shift – which some industry executives are going so far as to call the ‘new era of managed care’ – is coming with a price: Insurance premiums in Massachusetts will rise another 8 percent to 15 percent next year, and even more nationally, an increase that HMO executives attribute partly to the greater freedoms granted to members.”
“But Larry Levitt, a policy director at Kaiser, says he doesn’t buy the argument that greater freedoms for members are driving up costs. The only reason that HMOs are scrapping prior approval and referral policies in the first place, he said, is that they found members rarely sought surgeries and tests they didn’t need. In other words, the restrictions had little impact on the amount of care members received, but created frustration among doctors and patients.”
Larry Levitt, a policy director at Kaiser Family Foundation:
”There is no question that HMOs have loosened up on a whole range of issues, but the idea that it’s the culprit in rising costs is way overstated. These things were not saving them any money.”
Comment: Managed care health plans were effective in slowing the increase in health care costs by imposing fee controls in their contracts with providers. That was a one-time benefit that can be maintained, but cannot be used to prevent the expansion in health care services that is the real reason that rate of increases in health care costs continues to exceed that of inflation. Now we see that managed care plans are totally incapable of controlling utilization, and double digit increases will continue until we reach the threshold of bankruptcy, an effective but inhumane form of cost containment and rationing. Rationing is absolutely inevitable and is currently practiced in the health care systems of every other nation, but by utilizing much more humane methods. Only our system uses the unique method of rationing based on the ability to pay for health care, a cruel system that is now expanding to include working families. But we can contain costs much more humanely by changing to a system of funding health care costs that has a mission of optimizing allocation of our abundant health care resources. Public administration of a globally budgeted, universal health insurance program would fulfill that mission. Isn’t it time to take a serious look at that model of reform?