Opinion

Commentary: The HMO story

In theory HMOs were a great idea: Preventive care is free or cheap, so patients don't have financial excuses not to do things that make them less likely to get sick; their better health reduces their long-term medical costs, more than offsetting the costs of the preventive care. The insurance company saves money. The employer saves money. The patient saves money. And the patient is healthier and more productive at work.

The reality never quite matched the theory, as patients complained of being denied access to the specialists they needed when they weren't healthy, which is why HMOs never really took off.

What was missing was someone to hold the insurance companies' feet to the fire, and make sure they're saving money by preventing illness rather than by denying treatment.

In theory, the employers who contract with the insurance companies to cover their employees could provide the check. But financial constraints and short-term demands of the stock market meant that the reality never quite matched that theory either. (Since most people get insurance through their employers, they don’t have the realistic option of voting with their pocketbooks.)

That leaves government. But between the anti-regulatory obsession that has gripped Washington for the past couple of decades and the public's antagonism toward "government-run health care," that simply wasn't an option.

For all the hyperbole about government-run health care, the law the Congress passed this year provides precious little of the sort of oversight that would have made HMOs take off the way the theory suggested they would. That law will increase the number of people who are insured, but that was only half the problem. The huge shortcoming of the law was its utter lack of focus on responsible cost-containment.

And so now the insurance companies and the businesses and individuals who buy from them are once again turning to restrictions on care in order to manage the spiraling costs that the federal law won't bring under control yet, if ever. As The New York Times reported in July, insurers are rolling out new plans that cost less by putting a tighter leash on patients. Typical is an Aetna plan in New York that offers patients access to just half as many doctors and two-thirds of the hospitals that the insurer typically offers in managed-care plans.

Little wonder. The only way to contain costs without curtailing care on a large scale is by preventing illness so that over time you spend less money treating sickness. But "over time" is the key. Insurance companies can't afford to fully embrace preventive care when the people they're keeping healthy today are likely to be insured by a different company by the time their investments start to pay off. That leaves the same two possible options for making this solution work: the single-payer system where the insurance company (i.e., the government) knows it will reap the benefits; or laws that require insurance companies to take this long-term approach.

As we saw over the past year, our political system is currently incapable of pushing past the hysterical hyperbole about socialism and death panels to embrace either of those approaches.

That's why I was so excited when I saw that the state Medicaid program has asked for federal permission to expand what is essentially an HMO program. If it is approved, the agency projects that another 100,000 people will join the 475,000 who already have enrolled in its "Healthy Connections Choices" program since it started in 2007. Rather than the traditional fee-for-service model that still exists pretty much only in government health plans (how's that for irony?), Healthy Connections pays insurance companies a flat fee for each patient.

The Department of Health and Human Services says this gives insurance companies an incentive to provide "medical homes" and other mechanisms to prevent unnecessary emergency-room treatment and provide the preventive care that will reduce the costs of untreated chronic diseases. As the agency's Jeff Stensland told The Greenville News: "We know that the number one reason Medicaid beneficiaries visit the emergency room is for ear infections. The plans have 24-hour nurse lines to encourage care in a pediatrician's office instead of going to the ER for a non-emergency." A BlueChoice HealthPlan spokeswoman described a program that helps keep chronic diseases from escalating by offering "health coaches who touch base by phone, provide education materials, make sure the members are making their appointments, taking their medication and adhering to their doctor's care plan."

Of course the only reason the government can even experiment with such a program is the same one that makes it potentially dangerous: The people who make up hysterical stories about death panels don't tend to care so much about the options or the care of people who are too poor to pay for their own care, and poor people don't vote, so the government could get away with ignoring any complaints about insurance companies that skimp on their care.

So far, the numbers suggest that the government-controlled HMO approach is working, with Healthy Connections plans scoring higher than traditional Medicaid on lead screening, well-child visits, annual dental visits, adult access to preventive care, breast cancer screening, prenatal care, appropriate treatment for children with upper respiratory infections and treatment for chronic illnesses such as diabetes and asthma. The test will be whether the agency can keep producing such results or whether, in the face of state cost-cutting and short-term profit demands, it allows insurance companies to make money through less care rather than better care. We should all hope the test goes well.

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