HMOs' Rise Driven by Government, Not Market by Twila Brase
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Reprinted with permission from the January/February 1999
issue of "Health Freedom Watch", the bi-monthly publication
of the Institute for Health Freedom.
http://www.forhealthfreedom.org
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Dissatisfaction with HMOs has led some to call for
increased regulation of the HMO industry. Government
officials express concern for patient protection and access
to health care. Yet government action did much to encourage
the spread of HMOs'and government action continues to steer
people into HMOs.
HMO Act of 1973
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Unbeknownst to most, Congress has essentially mandated
managed care for everyone. In response to escalating costs
in the Medicaid and Medicare programs, Congress looked to
HMOs for assistance.
In 1973, it passed the HMO Act which offered government
subsidies to HMOs and gave nonlicensed HMO executives the
power to challenge the medical judgment of licensed
physicians.
The Act also mandated that all businesses with more
than 25 employees offer HMOs as a health care option. Until
then, most employers, fearing increased costs and
utilization, had avoided HMOs.
States Force People Into Managed Care
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During the early 1980's, Congress began allowing
states, through Medicaid Section 1115 waivers, to herd
Medicaid recipients against their will into managed care
programs. By June 1996, over 40 percent of Medicaid
beneficiaries were enrolled in managed care plans.
The Department of Health and Human Services (HHS) touts
the waivers as providing "states with the much-needed
flexibility to develop innovative solutions." That
flexibility, however, violates federal Medicaid law, which
prohibits limits on treatment or choice of doctor.
HMOs Gain Solid Ground
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In 1995, Congress repealed the employer mandate, but by
then, HMOs had already gained a solid position in the
medical marketplace. According to the Health Resources and
Services Administration, the percentage of working Americans
with private insurance enrolled in managed care rose from 29
percent in 1988 to over 50 percent in 1997.
Who Benefits From HMOs?
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By mandating managed care for some patient groups, and
by passing legislation allowing HMOs to deny care, the
government has assured maximum profit for HMOs, with little
risk. Public officials profit politically by promising
"free" health care. Managed care allows politicians to
promise health care without actually guaranteeing access to
it.
Americans are rightly concerned about managed care.
However, in public policy as in medicine, proper diagnosis
precedes proper treatment. Proposals to increase the
regulation of HMOs stem from an incorrect diagnosis.
Government- directed managed care is not the cure;
individual choice is.
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