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. They’re 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 won’t pay
the bill? Think it won’t happen to you? Guess again." Correspondent
Robert Hager then told of horror stories in which HMOs wouldn’t 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 doesn’t
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stone a set of standards that will be out of date before they are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
isn’t. "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 hasn’t yet occurred to the American media.