Health Maintenance Organization

HMOs: The Health Care of the Beast

Many people are concerned about rising health care costs. In reaction to this, some individuals and companies are gravitating toward the assumed lower prices of Health Maintenance Organization (HMO) health plans. HMOs spend billions of dollars each year advertising their low cost services. While these savings look good on paper, there are many pages of small print. The explanation after the asterisk indicates that not only do the HMOs lack lower costs, but they also short-change the patient in quality care. Much of the money spent on premiums goes directly into the pockets of stockholders and less is then available for patient care. In addition, the main clinical decisions are made not by doctors, but by a board of directors more interested in the bottom line than in little Jennie's cough. When the facts are considered, HMOs should not be permitted to assume the role of the primary medical care-givers.

Traditional insurance companies and HMOs have comparable premium rates. HMOs are too profit oriented and, because of this, their patient care lacks in quality. One way that HMOs cut their costs is to spend less on direct care. As opposed to fee-for-service (FFS) companies, patients relying on their HMO spend 17 percent less time in the hospital regardless of the degree of their illness. This said, patients in Medicare HMOs also spend about 17 percent less time than they would in a traditional setting. It is surprising that, in spite of this fact, Medicare patient risk contracts actually cost Medicare 6 percent more than they would have if done in a fee-for-service setting. (Rice, 79-80) The lack of savings is not limited to Medicare recipients. Spending on health care in California, which has one of the highest concentrations of HMOs of any state in America, is about 19 percent higher than the national average. There has only been one year since HMOs became so prevalent, 1994, in which employers nationwide saw a drop in their health insurance costs -- and it was an almost imperceptible 1 percent. These companies' earnings continue to skyrocket, and the HMO executives are always on the lookout for ways to increase profits by reducing care to their members. It is troubling that while cost remains nearly the same, the deficiency in quality service continues to increase.

Most of the money generated by FFS insurance goes directly to patient care and physicians' salaries.