Bradford H. Gray
The Rise and Decline of the HMO
A Chapter in U.S. Health-Policy History
Health maintenance organizations or HMOs were the object of many of the most bitter criticisms of American health care at the end of the twentieth century. Media accounts drew on experiences of doctors and patients to depict HMOs as impersonal, bureaucratic entities that were primarily interested in controlling costs (or generating profits) rather than enabling doctors and hospitals to meet the needs of patients.1 A national Harris poll in 1998 found that a solid majority (fifty-eight percent) of the American people believed that the quality of medical care that people receive would be harmed rather than improved by "the trend toward more managed care— with more people belonging to HMOs, PPOs, and other managed care plans" (Jacobs and Shapiro 1999, 1025). In response to managed care, serious efforts were made at the national level in the late 1990s to pass a patients' "bill of rights," even though health insurance and health-care organizations are regulated primarily at the state level. Notably, between 1995 and 2001, fortyseven states passed laws to regulate HMOs and other forms of managed care (Sloan and Hall 2002). In 1999, in introducing a special issue of the Journal of Health Politics, Policy and Law, editor Mark Peterson called the "managed care backlash," the issue's topic, "the most significant health policy issue since Congress pulled the plug on health reform" (874). By the beginning of the twenty-first century, HMOs had become a powerful symbol of a healthcare system gone awry.
Their power, however, was much more than symbolic. In 2000, more than eighty million Americans were enrolled in HMOs, and two-thirds were in plans affiliated with ten national managed-care organizations (InterStudy