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What The Media Tell Americans About Free Enterprise

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March 1998


Reporters Cite Symptoms, Miss Problem
Misdiagnosed HMO Woes

Heath Maintenance Organizations (HMOs) have grown steadily during the 1990s, to the point that most Americans receive their health care from one. For network reporters, this is a troubling development. Theyíre slow to report on HMO successes, and quick to cite their problems without exploring whether government policy might be at the root of such problems.

An example is a story on the March 16 NBC Nightly News. Anchor Brian Williams asked: "What happens when your HMO wonít pay the bill? Think it wonít happen to you? Guess again." Correspondent Robert Hager then told of horror stories in which HMOs wouldnít pay for needed medical care, such as when a Maryland woman fell from a cliff, sustained injuries, and had her HMO refuse to pay because "no one ever called beforehand to authorize the treatment." Hager reported that "overzealous cost-cutting [is] causing a backlash. Already more than half the states have passed laws to force better managed- care coverage, and later this year Congress will debate a patient protection bill, including the right to appeal any denied coverage to an outside independent panel."

Hager included a soundbite from an HMO association official, who pointed out HMOs have brought down medical inflation. But Hager closed with this emotional plea: "Now patients and lawmakers across the country want to be sure that in the end saving money doesnít become more important than saving lives."

But as the March 7 edition of The Economist points out, so-called patient protection legislation could end up causing more problems. The British weekly contends that "since medicine advances too fast for any politician to keep up, the reformers will cast in stone a set of standards that will be out of date before they are even passed." In addition, such legislation would "push up premiums. Some firms will respond by ceasing to provide health insurance for their staff," while others "will compensate for increased benefits by squeezing wages."

The magazine argues that "the evidence suggests that, overall, the HMO revolution has not only saved a fortune...but has done so while maintaining and sometimes improving upon previous medical standards." Quality would be better still, and there would be fewer horror stories, except "the government suppresses competition through the tax code." The problem: Health insurance provided by employers is tax-free, while health insurance bought in other ways isnít. "Workers are forced in effect to take whatever package their employer chooses, rather than the one they might prefer themselves."

The result: "Since the employer is the customer, HMOs compete more than they otherwise would on price rather than quality or convenience." Concludes The Economist: "The benefits of [heath care] competition would be all the greater if the government could bear to meddle a bit less."

This idea hasnít yet occurred to the American media.


ó Rich Noyes


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