HMO Phobia: Quack Remedies for the Health Care "Crisis."

By Hazlett, Thomas W. | Reason, February 1999 | Go to article overview

HMO Phobia: Quack Remedies for the Health Care "Crisis."


Hazlett, Thomas W., Reason


Dr. Ken Smith has a mission: to destroy the HMO system which today enrolls 85 percent of insured Americans. The Boston-based physician's reasons are simple and humane: "We are for patients, not profits." And his disgust is real: "How dare somebody in some board room in Connecticut decide what I'm worth, and on a whim decide that my worth should be reduced?"

The elements of the current crusade against managed care combine the front-page horror story of the access-denied victim with the political clout of a network of influential millionaires. In swank country clubs all across the land, high-powered attorneys are burying the hatchet with prosperous physicians, getting beyond that little multibillion-dollar spat over medical malpractice. Now they're toasting martinis and swearing litigation against the common enemy: HMOs that clamp down on medical costs.

It may shock the good Dr. Smith, but many of the common folk are quite used to having distant big shots in faraway boardrooms establish the price for their labor. And as for the purity of spirit to which Smith appeals, we do appreciate the thought. But it's best to avoid any kind of competition regarding who's been more successful in bringing health care to the masses, the typical HMO shareholder vs. the typical M.D. After all, who is more likely to be recreating out on the golf course Wednesday afternoon?

The health care market is tricky, and the shadow under which all discussion takes place is the cost explosion tied to third-party payments. When Dr. Smith was perfectly free to prescribe for "his" patient and push the costs onto others - well, that was the Golden Age for doctors. And, coincidentally, 9.9 percent annual medical cost inflation (just to pick the peak year, 1991) for the rest of us.

Managed care stepped in - indeed, it arrived in an ambulance answering a 911 call from ratepayers. HMOs had a tough job to do, teaching lots of doctors with egos the size of Smith's that there ain't no such thing as a free surgical procedure. They have yet to succeed; a group Smith has helped to organize, The Ad Hoc Committee to Defend Health Care, protests the "HMO bean counters" and advocates a single-payer system.

The reality is that the rationing that accompanies state-run systems makes the HMOs look like big spenders. That's not because the government hires better "bean counters." Quite the reverse - the beans sort of just disappear. And then it's, "Sorry, you'll just have to wait on that heart bypass until some more beans turn up."

Marc Roberts, a Harvard economist specializing in health care markets, claims that the doctors' real aim is "to regain status, power and income that they lost in this for-profit industry," and that holding the patient's welfare out as a bargaining chip is a smart stratagem. …

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