Care Denied As Hmos Rake In Money

News flash from the wild frontier of American health care: Health maintenance organizations (HMOs) are firing their medical staffers for telling patients about financial incentives to deny care.

The most celebrated case involves Dr. David Himmelstein, a Harvard Medical School professor. U.S. Healthcare threw Himmelstein out of its HMO after he blabbed on Phil Donahue’s TV talk show about the HMO’s monetary rewards for keeping patients away from expensive specialists. U.S. Healthcare also penalizes internists 50 cents for every dollar one of their patients spends in an emergency room.

Such perverse incentives encourage doctors to avoid sick patients. These incentives also happen to be commonplace in the HMO business. Some HMOs forbid doctors to discuss with a patient any medical care options that the insurer has not already agreed to pay for.

Himmelstein is a well-known agitator for a single-payer health system in which the government insures everyone. However, even many ordinary doctors are becoming repelled by the corporate takeover of health care. (An editorial in the Dec. 21 issue of the New England Journal of Medicine details these practices. The authors are Himmelstein and Dr. Steffie Woolhandler.)

Could you imagine the citizenry tolerating a government system that barred doctors from discussing financial incentives for skimping on care? How is it that the public will meekly accept all sorts of indignities from the private sector but bitterly complain when the government imposes far milder limits?

The answer is that the public has been thoroughly brainwashed by politicians and insurance companies. They issue daily warnings against letting Washington “take over” American health care.

The arrangement is pretty cozy: Insurance companies fill the politicians’ campaign chests; in turn, politicians make sure that nothing happens in Washington to jeopardize the insurers’ license to print money.

Consider the above example of U.S. Healthcare.

This corporation makes $1 million a day in profits. Its chief executive officer pocketed $20 million in one year and holds more than half a billion in company stock. Other HMOs are hardly charity cases. Indeed, both Prudential and United Healthcare control more capital than does U.S. Healthcare.

How do these companies manage to make so much money? Their secret is to force down fees paid to doctors and hospitals and to reward medical providers for severely limiting care.

By spending less on medical care, HMOs can keep about 25 cents out of every insurance dollar for themselves. In contrast, the government’s Medicare program spends only 2 cents of every dollar for non-medical purposes. So much for scare talk about a bloated government health care bureaucracy!

Keep in mind that all these riches originated in the paychecks of American workers. Either their employers took the money out of their wages, in the form of health benefits, or the money went directly in taxes to Medicare.

Medicare also has become a cash cow for HMOs. In 1993, the cost of providing health care for 53 percent of Medicare enrollees was under $500 each. That about equals the premium Medicare pays a Boston HMO for one month of coverage.

As House Speaker Newt Gingrich and crew seek to reduce the growth of Medicare spending, they actually are trying to increase the amount the government pays to HMOs, which already are making money hand over foot. Interesting, isn’t it?

Market forces do a good job of providing most goods and services at low cost. But health care is different because the patient generally does not buy the insurance.

For most workers, the employer provides the coverage, and companies understandably want to keep this expense down. Thus, insurers are engaged in a race to the bottom to cut costs for employers while making huge profits for themselves.

In Canada, the government is the sole provider of health insurance. Other nations allow the participation of private insurers - but their governments assume a strong regulatory role. The citizens of Canada, Germany and France all enjoy guaranteed and excellent health coverage. They also spend a smaller proportion of their national income on health care than do Americans.

They do so much more for less because their governments have not allowed insurance privateers to loot their health care systems. Americans need to re-educate their elected officials.

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