PNHP

Marjorie B. Colson: Medicare is fine model for single-payer health system

Marjorie B. Colson: Medicare is fine model for single-payer health system

By Marjorie B. Colson
June 11, 2003

I am an 80-year-old American enrolled in a 40-million-member single-payer health plan called Medicare. I have been enrolled in Medicare for 15 years, and while I am not 100 percent satisfied with the program, I wouldn’t trade it for any private health insurance plan anywhere in the world. I have good company, and lots of it. Roughly 40 million people agree with me.

Here’s why:

I know, when I go to the doctor or to the hospital, my bills will be paid. Twice over the past two years, I have been in the hospital as the result of a fall. Once I broke my hip and needed a stay in the hospital, hip surgery and follow-up rehabilitation; and once I fractured an ankle and sprained my feet and one knee, requiring, again, hospitalization and follow-up rehabilitation at a nursing home. For those services, plus many additional weeks of outpatient therapy, I paid nothing.

I feel fairly secure about my health insurance plan, as it is shared by about 40 million people, most of whom are prepared, at the drop of a hat, to take action to foil government officials proposing changes in our plan that might affect us adversely.

I am very familiar with the power of Medicare recipients, being the president of a large senior organization in central Wisconsin, and being responsible on occasion to organize a response to a government action that we feel threatens our health and our quality of life. Something called “Third Rail Politics” has been developed around both the Medicare and Social Security programs as a result of our activism on behalf of ourselves and others like us.

Because my health plan is public, a government plan, I have three elected officials who might be said to sit on the board of my health plan. My representatives are accountable to me and my fellow seniors, and respond to our complaints and problems.

If I were in a private health plan, the board would be made up of individuals appointed by shareholders. Such board members are never accountable to patients of their health insurance or health maintenance companies. Patients, in fact, don’t know who board members are and have no right to try to speak to them about the quality of their care.

I suggest that fellow citizens enrolled in smaller splinter groups called private insurance plans might want to look at the ability of senior and disabled people to defend our programs and ourselves, and consider trying to get into our single-payer plan or a similar government health plan. I can guarantee, after 15 years in Medicare, that it will take a huge worry from your mind.

I have absolute freedom to choose my doctor or other health care provider. I have a government-issued card that guarantees me entrance to the clinic or hospital of my choice. And my membership in the huge Medicare club assures me help and support when I need it.

Like many senior and disabled people on Medicare, I do not currently have a prescription drug benefit. That situation, interestingly, is being remedied (at least partially and temporarily) by the small free market that happens to still exist in the nation. Storefronts and Internet sites selling drugs at Canadian prices are proliferating so rapidly that retail pharmacists are trying to organize to force seniors and disabled people to return to their own more pricey U.S. pharmacy counters. It won’t happen, as more and more Medicare recipients find their own cut-rate pharmacies with Canadian prices. We are creating our own remedy, e-mailing each other as we find new and better drug prices in Canada – a country with a single-payer health care system that serves all of its citizens.

When people talk about how hard it is to repair the broken health care system in the United States, I respond by reminding them that a rational and realistic solution exists:

Single-payer anyone? Join the club.

Marjorie B. Colson lives in Madison and is active with many local groups, including the Dane County SOS Senior Council.

Published: 10:09 AM 6/11/03

http://www.madison.com/captimes/opinion/column/guest/50645.php

LeBow wishes he could ride

Community: Nampa doctor to be honored by cross-country bike tour

By Nathaniel Hoffman

NAMPA – As Canyon County cyclists train for the first ever Bob LeBow Classic Bike Tour, LeBow continues to train his mind and body after a July 2002 bike accident that left him paralyzed.

LeBow was an avid cyclist who used to commute to his job as medical director of Terry Reilly Health Services in Nampa by bicycle and had ridden his bike all over the world. Now he speaks in short sentences through a ventilator from his son’s home in a Philadelphia suburb.

“Too bad I can’t ride in it,” LeBow said, adding that he was honored the ride was named after him.

LeBow and his wife have race bibs number one and two pinned up near his bed, and their son Ted LeBow and granddaughter Becca are coming to Nampa to ride in the tour on Saturday.

Bob LeBow’s wife, Gail LeBow, said she has seen tandem bicycles that can accommodate quadriplegic people and hopes the couple will one day be able to ride again.

“It’s a very steep learning curve,” Gail LeBow said of all the details that come along with taking care of her husband.

But Bob LeBow, 62, said his stamina has increased from almost zero to the point that he does physical therapy exercises and is learning how to write with a special computer and paint with a mouth stick.

He is learning to use a chin switch and eventually a chin mouse so that he can write on his own and practices on a computer screen mounted to his chair.

“I’ve been gradually improving my writing,” Bob LeBow said.

He published a book shortly before the accident exposing many of the weaknesses in the U.S. health care system, and the book will soon come out in hard cover.

The LeBows said they miss Idaho and the clinic and are glad that people are still thinking about them.

“I’d like to be there,” Bob LeBow said.

For more about the Bob LeBow Classic Bike Tour.

Bob LeBow is a past PNHP president.

Single Payer Passes Senate in California

SB921 (Kuehl), the Health Care For All Californians Act, a landmark healthcare reform declaring the intent of the legislature to establish a single payer health care system for all California residents at no new cost to the state, passed the California Senate Floor Wednesday morning on a vote of 23 to 14. The bill now moves to the State Assembly.

“The California Health Care Options Project completed last year demonstrated that comprehensive health care coverage could be provided for everyone at a cost lower than that of our current inefficient and inadequate system,” explains Don McCanne, president of Physicians for a National Health Program (PNHP.)

“In SB 921, Sen. Sheila Kuehl has provided the legislative vehicle to enact a single payer system that would finally bring affordable health care to all.”

The California Physicians Alliance(CAPA), the state chapter of Physicians for a National Health Program are active in speaking and writing articles about the need for health care reform in the state.

If you’re interested in supporting single payer health care in California, please contact the California Physicians Alliance at capa@jps.net or call (510) 832-7134.

Note:This bill is, in effect, a committment by the legislature to continue to study the issue, keeping the possibility for reform open, but not making single payer a certainty by any means. Stay tuned and if you live in California, please join the struggle for reform.

D. Light on Enthoven's model

Donald W. Light, Ph.D. responds on Enthoven’s managed competition model:

Hope springs eternal for Enthoven. He forgets his own previous analyses, where he describes how for-profit HMOs did not set themselves up as group models that would allow such plan – plan competition, but instead all signed up a large proportion of the same physician pools in order to maximize appeal to policy-holders, thereby emasculating his competition model. If only HMOs would behave as the competition model says they are supposed to behave!

Private health plans unable to contain costs

Health Affairs
Web Exclusive
11 June 2003
Tracking Health Care Costs: Trends Stabilize But Remain High In 2002
by Bradley C. Strunk and Paul B. Ginsburg

Health care spending per privately insured person increased 9.6 percent in 2002, a slight reduction from the 10 percent increase in 2001. This is the first time in five years that the spending trend did not accelerate. Nonetheless, health care spending grew nearly four times faster than the U.S. economy grew in 2002 (2.7 percent per capita in nominal terms).

Consumers appear to be facing a second round of sizable increases to cost-sharing requirements in 2003. Recent reports of insurers to Wall Street suggest that employers “bought down” their insurance premiums by an average of roughly 3 percent in 2003. This means that insurance premiums would have increased 3 percent more than they did had employers made no changes to their benefit structures. This increase in cost sharing comes on the heels of a 2-3 percent buy-down in 2002.

http://www.healthaffairs.org/WebExclusives/Strunk_Web_Excl_061103.htm

Comment: Health care spending growth under private health insurance is four times the growth of the U.S. economy. That hardly represents stabilization of health care costs. The fact that private health plans remain incapable of containing health care costs is certainly no reason to celebrate. And the current trend to make health care less affordable by shifting more costs to patients is a sick, perverse solution.

Face it: We're rationing health

By Robert Kuttner, 6/11/2003

HEART DISEASE runs in part of my family. A beloved uncle died at 50 of a heart attack. One grandmother died in her 60s of congestive heart failure; the other of high blood pressure. Others, happily, have lived into their 90s, and I hope I take after them.

In those years, doctors could do little. There was aspirin for pain, nitroglycerine for temporary relief of ”angina,” and digitalis to stimulate the heart. That was it.

But today my fate is not just a matter of diet, exercise, and genetics. There are statin drugs if my arteries tend to clog, several classes of blood pressure medication, and much more. There are elegant diagnostic tests, like the echocardiogram I recently had, where I could both see my heart and its valves on a monitor and listen to the healthy sloshing of my splendid pump. (I’m fine, Mom, this was a routine screening.) And if things ever get bad, there are delicate angio-procedures, valve jobs, triple and quadruple bypasses, even heart transplants. And they all cost a small fortune, from the $10 pills to the $20,000 surgeries. One thing about aspirin, nitrogylcerine, and digitalis: They were dirt cheap. Science keeps inventing ways to keep us alive and well, and all of us expect nothing but the best.

All of which brings me to the debate about health insurance. There are really two issues here, and they tend to get blurred. The first is how we contain costs. The second is how we cover everybody. Seemingly, the two goals are at odds with each other.

How on earth do you restrain health costs as the population keeps aging and as science keeps marching on, much less if everyone is insured? One easy solution: freeze the state of science at about 1950, and we could insure everyone in the United States for cheap. But who wants that?

The fact is that HMOs and the employers who buy most of the insurance can disguise the ugly word all they want, but much of what they do is a form of rationing. They limit available tests, drugs, and procedures. They punish doctors in the pocketbook for spending more than a few minutes with patients. They make the paper chase so complex that many consumers just give up and don’t fill the prescription, or they go without the procedure (and the richer among us just pay out of pocket). All of these measures can be politely called managed care or ”alignment of incentives,” but all are forms of rationing. And unlike true rationing, in which care is based on dire need, wealthier people can always buy their way out.

We are hearing a lot from the Bush administration that competition is the solution to escalating health costs. You can shop around for a car or a hotel; why not for a health plan?

The reason is that medicine and health insurance are not ordinary commodities. For starters, most private health plans deny consumers meaningful choices. The whole point is to limit the choice of doctors and hospitals to those who give the plan discounts and follow the managed care company’s treatment rules.

Insurance companies also spend a fortune on marketing (to target consumers less likely to get sick), on claims processing, and on profit. One of the worst sources of inefficiency in the whole system is the cost of the fragmentation that comes from having duplicative and parallel private bureaucracies.

Every reputable study, including the most recent one from the bipartisan Congressional Budget Office, shows that the most cost-effective way of spending limited health dollars is through a single universal system, like Medicare. The elderly may be bewildered by the system, but they are no fools. They know that the one oasis of completely secure coverage and fully free choice is conventional Medicare. That is why the Bush administration, despite wanting to herd seniors into HMOs, caved in and agreed to allow (still too skimpy) drug benefits for people who stay with Medicare.

Here’s where the two questions – cost containment and coverage – come together. The best way of cutting avoidable costs (but not cutting care) and also insuring every American is to put everyone in the same universal system. There would still be difficult choices, but nothing like the insecurity, cost-shifting, waste, and profiteering of the present system.

What stands in the way? Only the insurance industry, the drug companies, the Fortune 500, half the American Medical Association, and the Republican Party. That’s all.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

This story ran on page A23 of the Boston Globe on 6/11/2003.
© Copyright 2003 Globe Newspaper Company.

D. Light on Enthoven’s model

Donald W. Light, Ph.D. responds on Enthoven’s managed competition model:

Hope springs eternal for Enthoven. He forgets his own previous analyses, where he describes how for-profit HMOs did not set themselves up as group models that would allow such plan – plan competition, but instead all signed up a large proportion of the same physician pools in order to maximize appeal to policy-holders, thereby emasculating his competition model. If only HMOs would behave as the competition model says they are supposed to behave!

Face it: We’re rationing health

By Robert Kuttner, 6/11/2003

HEART DISEASE runs in part of my family. A beloved uncle died at 50 of a heart attack. One grandmother died in her 60s of congestive heart failure; the other of high blood pressure. Others, happily, have lived into their 90s, and I hope I take after them.

In those years, doctors could do little. There was aspirin for pain, nitroglycerine for temporary relief of ”angina,” and digitalis to stimulate the heart. That was it.

But today my fate is not just a matter of diet, exercise, and genetics. There are statin drugs if my arteries tend to clog, several classes of blood pressure medication, and much more. There are elegant diagnostic tests, like the echocardiogram I recently had, where I could both see my heart and its valves on a monitor and listen to the healthy sloshing of my splendid pump. (I’m fine, Mom, this was a routine screening.) And if things ever get bad, there are delicate angio-procedures, valve jobs, triple and quadruple bypasses, even heart transplants. And they all cost a small fortune, from the $10 pills to the $20,000 surgeries. One thing about aspirin, nitrogylcerine, and digitalis: They were dirt cheap. Science keeps inventing ways to keep us alive and well, and all of us expect nothing but the best.

All of which brings me to the debate about health insurance. There are really two issues here, and they tend to get blurred. The first is how we contain costs. The second is how we cover everybody. Seemingly, the two goals are at odds with each other.

How on earth do you restrain health costs as the population keeps aging and as science keeps marching on, much less if everyone is insured? One easy solution: freeze the state of science at about 1950, and we could insure everyone in the United States for cheap. But who wants that?

The fact is that HMOs and the employers who buy most of the insurance can disguise the ugly word all they want, but much of what they do is a form of rationing. They limit available tests, drugs, and procedures. They punish doctors in the pocketbook for spending more than a few minutes with patients. They make the paper chase so complex that many consumers just give up and don’t fill the prescription, or they go without the procedure (and the richer among us just pay out of pocket). All of these measures can be politely called managed care or ”alignment of incentives,” but all are forms of rationing. And unlike true rationing, in which care is based on dire need, wealthier people can always buy their way out.

We are hearing a lot from the Bush administration that competition is the solution to escalating health costs. You can shop around for a car or a hotel; why not for a health plan?

The reason is that medicine and health insurance are not ordinary commodities. For starters, most private health plans deny consumers meaningful choices. The whole point is to limit the choice of doctors and hospitals to those who give the plan discounts and follow the managed care company’s treatment rules.

Insurance companies also spend a fortune on marketing (to target consumers less likely to get sick), on claims processing, and on profit. One of the worst sources of inefficiency in the whole system is the cost of the fragmentation that comes from having duplicative and parallel private bureaucracies.

Every reputable study, including the most recent one from the bipartisan Congressional Budget Office, shows that the most cost-effective way of spending limited health dollars is through a single universal system, like Medicare. The elderly may be bewildered by the system, but they are no fools. They know that the one oasis of completely secure coverage and fully free choice is conventional Medicare. That is why the Bush administration, despite wanting to herd seniors into HMOs, caved in and agreed to allow (still too skimpy) drug benefits for people who stay with Medicare.

Here’s where the two questions – cost containment and coverage – come together. The best way of cutting avoidable costs (but not cutting care) and also insuring every American is to put everyone in the same universal system. There would still be difficult choices, but nothing like the insecurity, cost-shifting, waste, and profiteering of the present system.

What stands in the way? Only the insurance industry, the drug companies, the Fortune 500, half the American Medical Association, and the Republican Party. That’s all.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

This story ran on page A23 of the Boston Globe on 6/11/2003.
© Copyright 2003 Globe Newspaper Company.

HealthCARE Act of 2003

American College of Physicians
ObserverWeekly
6-10-03
Access update
New House bill based on ACP proposals to expand access to care

Legislators introduced a bill into the House today to expand health insurance coverage to millions of uninsured Americans. The proposal already has the support of organizations representing more than 300,000 physicians.

The bill is identical to legislation introduced into the Senate last month. Both proposals are modeled after ACP’s seven-year plan to expand access to care to all Americans by 2010.

Reps. Steven LaTourette (R-Ohio) and Marcy Kaptur (D-Ohio) introduced the Health Coverage, Affordability, Responsibility and Equity (HealthCARE) Act of 2003.

The bill would give states new options to expand coverage through existing public programs. It would also give individuals a tax credit to buy coverage from private plans.

The House legislation would expand access to care through the following measures:

* Give states new options to expand safety net programs for the poor.

* Create refundable tax credits to give eligible individuals the same subsidies to buy health insurance that the federal government gives its employees.

* Allow tax credits to be used to buy individual coverage or coverage through a state purchasing pool modeled after the Federal Employees Health Benefit program.

* Give small businesses access to the same types of affordable health plans available through state purchasing arrangements.

* Create an expert commission to recommend additional measures.

Supporters of the legislation include ACP (American College of Physicians), Families USA, the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Cardiology and the American College of Geriatrics.

http://www.acponline.org/weekly/2003/6/10/index.html?hp#accessbill

The identical bill introduced in the Senate by Sen. Jeff Bingaman (NM), S.1030, HealthCARE Act of 2003, is available at Thomas: http://thomas.loc.gov/, and type in the bill number, S.1030

Comment: It is unlikely that this “bipartisan” bill will engender significant Republican support, especially without the Tom DeLay/Bill Thomas stamp of approval. But if the public demand for comprehensive reform increases much more, this bill could gain traction. And it does have the support of Families USA and several significant physician organizations.

Although this bill might expand coverage, it would do so partly by expanding private plans through an FEHBP model which would leave in place very costly administrative inefficiencies, and would expose low-income individuals covered by this legislation to cost-sharing that could threaten affordability of care. Analyses of similar proposals demonstrate that this is a very costly method of expanding care. And for moderately low-income, uninsured individuals, this bill provides only a committee that will think about their problem.

If such a bill were to pass, it would greatly reduce or even eliminate the pressure to enact reform that would ensure affordable, comprehensive health care for everyone. If we really do want an equitable health care system that meets our goals, we’re simply going to have to replace the private health plans with a single program of social insurance.

Let’s not be distracted by yet another costly but inadequate attempt to achieve a “politically feasible,” compromise proposal.

Enthoven's managed competition model

Health Affairs
Web Exclusive
28 May 2003
Employment-Based Health Insurance Is Failing: Now What?
A strategy, based on managed competition, to free employers from the health
care cost spiral and produce effective managed care.
By Alain C. Enthoven

There are two types of HMOs existing today. “Carrier HMOs” are insurance companies that offer a comprehensive benefit package, characteristic of HMOs, but deliver the services by contracting with independent doctors or medical groups whose main mode of payment remains fee-for-service (FFS). This is in contradistinction to “delivery system HMOs” that are based on their own dedicated medical groups and working mainly under per capita prepayment. The latter are a much more powerful lever for reshaping health care.

“Managed competition” is an alternative to… (current) employer policies. The idea is for the employer to increase competition by offering employees a wide choice of carriers and plan designs, a responsible choice (employees are fully responsible for premium differences), individual choice, informed choice, and multiple choices of delivery systems. If a critical mass of employers were to do this in a market, they could create conditions in which efficient delivery systems could enter, market their superior value for money, and achieve economies of scale. In managed competition, insurers need to be linked with specific, geographically overlapping delivery systems. (Six carrier HMOs, each offering practically every provider in town, would not be “competition” in this sense. The point is competition among delivery systems, not just carriers.)

http://www.healthaffairs.org/WebExclusives/Enthoven_Web_Excl_052803.htm

Comment: In this article, Professor Enthoven identifies many of the problems inherent in the current employment-sponsored, managed care system. He continues to support his model of managed competition as the solution to our wasteful, dysfunctional system. But his model is dependent on the voluntary initiative of a “critical mass” of employers to create a market in which “geographically overlapping” delivery systems, with “economies of scale,” would compete.

Although perhaps an oversimplification, his model suggests that almost all physicians, hospitals, and other providers be placed in several Kaiser-type HMOs within the same community, without significant provider overlap. Even densely-populated urban regions would find difficulties supporting multiple, large, integrated delivery systems. And experience has shown that many suburban and almost all rural areas cannot support even a single integrated delivery system. This does not mean that integrated delivery systems should be excluded as a form of health care delivery, but they can never be relied on as the dominant model in all communities, unless as a universal, public health service model.

There are critical issues that must be addressed during our efforts to reform the funding of health care. Ensuring affordable access to comprehensive services for everyone must be our primary mission. A mission of establishing an artificial business model designed specifically to enhance marketplace competition, regardless of the negative impact on patients, misses our priorities for reform, and should be discarded as the inadequate and highly flawed concept that it is.

Physician behaviour in the single payer system of Taiwan

Health Affairs
May/June 2003
Taiwan’s New National Health Insurance Program: Genesis And Experience So
Far
by Tsung-Mei Cheng

Taiwan’s NHI is a government-run, single-payer national health insurance scheme, financed through a mix of premiums and taxes, that compensates a mixed public and private delivery system predominantly on a fee-for-service basis. NHI enrollment is mandatory, to ensure adequate risk pooling and the broad-based collection of funds to finance the NHI.

Taiwan’s health care providers obtain their revenues from three sources: (1) payments by the NHI, (2) patient user fees and copayments, and (3) proceeds from the sale of products and services not covered by the NHI.

Experts in Taiwan appear to believe that the absolute level of fees paid by the NHI is too low and that many fees are considered to be below cost. In the absence of effective volume controls, providers’ simplest response to low fees is to expand the volume of services they provide while reducing the resources going into each unit of service (for example, shortened visit length). The BNHI’s chief executive officer, Hong-Jen Chang, remarked that “Taiwan’s doctors are well paid. But they work very, very hard to use volume to make up for the low fees.” Ta-Fu Huang, chairman of the DoH’s Quality Commission, has written extensively about Taiwan’s medical culture of the “three-minute patient visit” with physicians that is typical of doctors in Taiwan. That fee-driven practice style may lead to misdiagnosis, improper treatment, or delays in proper treatment.

A feature that Taiwan’s health system shares with other health systems in Asia is that hospitals are allowed to sell patients drugs at prices far above their acquisition cost, which they negotiate with the drug companies. In the Taiwan vernacular, the resulting profit margins are known as the “drug price black hole.” The U.S. analogue of this practice is the profits oncologists serving Medicare patients can earn on drugs they use in outpatient chemotherapy. Coupled with the PF system of rewarding hospital-based doctors, permitting hospitals to profit from the sale of drugs leads to a serious conflicts of interest, as it invites the overmedication of patients, including a perilous overmedication with antibiotics. According to a December 2002 study report by the DoH, close to half of the doctors in Taiwan prescribe four to five drugs per visit for upper respiratory infections, and 10 percent prescribe more than eight drugs; in only fourteen of 103,024 outpatient visits did the doctor not prescribe any drugs. The CEO of a large private hospital told me that 44 percent of his hospital’s income is derived from the prescription and sale of drugs to patients.

To the detached observer, Taiwan’s current health system conveys a confusing picture. The nation spends only 5.44 percent of its GDP on health care from all sources (or about 6 percent on a more inclusive measure). By the benchmark of the OECD countries, a nation with Taiwan’s current GDP per capita (US $14,188) would be expected to spend somewhere around 7.3 percent of its GDP on health care, give or take half a percentage point. This estimate could be taken to mean that Taiwan’s health system is underfunded. Not surprisingly, there have been calls for increased spending to improve equity and quality.

On the other hand, however, the accusation of widespread supply side-driven, provider-induced use of health care suggests a surplus of capacity, even at the relatively low spending level of only 5.44 percent of GDP. It leads critics of Taiwan’s provider community to argue that allocating a higher percentage of GDP to health care might make the problem of excess capacity even worse and merely increase the profits of providers.

A reconciliation of these contradictory perspectives may be to argue that what is actually in surplus is relatively low-quality care, whose expansion should not be encouraged with added funds. At the same time, it probably is true that a high quality, state-of-the art health system with longer patient visits, more accurate diagnoses, better-equipped hospitals, timely introduction of new drugs and technology, a better information infrastructure, and superior quality all around probably would require more than the current 5.44 percent of GDP. If that interpretation is valid, any move to a higher level of spending should be carefully targeted.

… additional funding should be directed to the development of an IT infrastructure capable of identifying waste, fraud, and abuse and, at the same time, inducing the delivery system to practice high-quality, evidence-based medicine.

http://www.healthaffairs.org/readeragent.php?ID=/usr/local/apache/sites/healthaffairs.org/htdocs/Library/v22n3/s14.pdf

Comment: As we advocate for reform, it is important to understand both the problems that can arise with single payer systems and the solutions to those problems. We need to be able to counter the criticisms of the opponents of reform, and then we will need to be certain that mechanisms will be in place to ensure efficient utilization of our health care resources.

Enthoven’s managed competition model

Health Affairs
Web Exclusive
28 May 2003
Employment-Based Health Insurance Is Failing: Now What?
A strategy, based on managed competition, to free employers from the health
care cost spiral and produce effective managed care.
By Alain C. Enthoven

There are two types of HMOs existing today. “Carrier HMOs” are insurance companies that offer a comprehensive benefit package, characteristic of HMOs, but deliver the services by contracting with independent doctors or medical groups whose main mode of payment remains fee-for-service (FFS). This is in contradistinction to “delivery system HMOs” that are based on their own dedicated medical groups and working mainly under per capita prepayment. The latter are a much more powerful lever for reshaping health care.

“Managed competition” is an alternative to… (current) employer policies. The idea is for the employer to increase competition by offering employees a wide choice of carriers and plan designs, a responsible choice (employees are fully responsible for premium differences), individual choice, informed choice, and multiple choices of delivery systems. If a critical mass of employers were to do this in a market, they could create conditions in which efficient delivery systems could enter, market their superior value for money, and achieve economies of scale. In managed competition, insurers need to be linked with specific, geographically overlapping delivery systems. (Six carrier HMOs, each offering practically every provider in town, would not be “competition” in this sense. The point is competition among delivery systems, not just carriers.)

http://www.healthaffairs.org/WebExclusives/Enthoven_Web_Excl_052803.htm

Comment: In this article, Professor Enthoven identifies many of the problems inherent in the current employment-sponsored, managed care system. He continues to support his model of managed competition as the solution to our wasteful, dysfunctional system. But his model is dependent on the voluntary initiative of a “critical mass” of employers to create a market in which “geographically overlapping” delivery systems, with “economies of scale,” would compete.

Although perhaps an oversimplification, his model suggests that almost all physicians, hospitals, and other providers be placed in several Kaiser-type HMOs within the same community, without significant provider overlap. Even densely-populated urban regions would find difficulties supporting multiple, large, integrated delivery systems. And experience has shown that many suburban and almost all rural areas cannot support even a single integrated delivery system. This does not mean that integrated delivery systems should be excluded as a form of health care delivery, but they can never be relied on as the dominant model in all communities, unless as a universal, public health service model.

There are critical issues that must be addressed during our efforts to reform the funding of health care. Ensuring affordable access to comprehensive services for everyone must be our primary mission. A mission of establishing an artificial business model designed specifically to enhance marketplace competition, regardless of the negative impact on patients, misses our priorities for reform, and should be discarded as the inadequate and highly flawed concept that it is.