Health Care Systems and HMOs

Faced with declining payment rates, California providers have implemented various strategies that have strengthened their leverage in negotiating prices with private health plans. When negotiating together, hospitals and physicians enhance their already significant bargaining clout. California’s experience is a cautionary tale for national health reform: It suggests that proposals to promote integrated care through models such as accountable care organizations (ACOs) could lead to higher rates for private payers. Because antitrust policy has proved ineffective in curbing most provider strategies that capitalize on providers market power to win higher payments, policy makers need to consider approaches including price caps and all-payer rate setting.

In his State of the Union address, President Obama no doubt will promise to attack the deficit. Trouble is, the deficit is only a symptom of a chronic disease that strikes at the very heart of democratic government. The disease? Fiscal sclerosis — setting future national priorities in stone long before the future has arrived. Our fiscal arteries are so clogged and hardened that to do anything new, meet any emergency, or engage any new opportunity, the president must renege on past legislators' promises. If he doesn't address unsustainable promises head on, government will be tied up with yesterday's problems and the demands of yesterday's voters.

In this special presentation, the United Kingdom’s secretary of state for health, the Rt. Hon. Andy Burnham, M.P., will argue that now is the time for England and America to share much-needed perspective and knowledge and to bust a medical myth or two.

Bradford Gray traces HMOs movement from the periphery to the center of the American health care system and from depiction as policy solution to policy problem. The paper describes where HMOs came from, how they became important, and how they came to act in ways that generated the managed care backlash of the 1990s. He shows that the problems of the HMO movement came partly from compromises in the original HMO Act of 1973 as well as later policy decisions regarding sources of capital, the ERISA exemption from state regulation, and the Internal Revenue Service's hostility toward nonprofits. (History and Health Policy in the United States edited by Rosemary A. Stevens, Charles E. Rosenberg, and Lawton R. Burns, Rutgers University Press, 2006.)

This study explores how mandatory Medicaid managed care (MMC) programs affect access to care and use among full-year Medicaid beneficiaries, using data from the 1997 and 1999 National Survey of America’s Families. The authors compare Medicaid enrollees in FFS and MMC counties. To control for unobserved county differences, the authors estimate difference-in-difference models using a comparison group of privately insured individuals. The effects of MMC vary by type of program, with weaker effects for PCCM programs relative to programs that require mandatory HMO enrollment. The strongest finding is that HMO programs lower emergency room use by Medicaid adults. (Garrett, Bowen, and Zuckerman, Stephen. July 2005. "National Estimates of the Effects of Mandatory Medicaid Managed Care Programs on Health Care Access and Use, 1997-1999." (Medical Care 43(7):649-657.)