NCPA - National Center for Policy Analysis

Are HMOs Terminally Ill?

July 30, 2001

Some health policy specialists are speculating on the possible demise of health maintenance organizations (HMOs). The prognoses range from weak and sick to too late to save.

Paul B. Ginsburg, president of the nonpartisan Center for Studying Health System Change, states that purchasers no longer have "the promise of managed care to help keep costs in check."

Here are some of the HMOs ailments:

  • Doctors are increasingly refusing to accept the terms managed-care health-plans are offering and are refusing to participate in HMOs.
  • Hospitals have been merging, gaining clout and demanding higher reimbursements from health-care plans.
  • Patients are succeeding in attempts to gain unfettered access to physicians of their choice.
  • Specialists say legislation won't cure the 30-year-old, $600 billion HMO system.

As managed care weakens, the need increases for a new way to assure that people can get medical care they couldn't otherwise afford. Yet financial consultants say any new system will cost more.

They predict employers will be forced to alter their health plans -- increasing contributions and co-payments for what will be less comprehensive coverage.

Experts predict that whatever system emerges, the costs will be enormous.

Source: August Gribbin, "HMOs Are in Terminal Condition, Experts Say," Washington Times, July 30, 2001.


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