With the failure of Hillarycare in the early 1990s, health maintenance organizations became one of the primary forms of American health insurance. Liberals screamed–including yours truly–that HMOs cut levels of care and stint on patient welfare in the name of saving money. HMOs became the hated greedy villains of the health care industry, railed against from pillar to post–often with good cause (such as 12 minute doctor visits).
To control costs, HMOs pay doctors and hospitals fixed fees (capitation) as an incentive to keep people well and not over treat when they are sick. And they have been criticized roundly for refusing coverage whenever it could be conceivably justified, no matter the stretch. I still worry about HMO financial incentives, but note that tort law and regulators on the side of patients serve as powerful disincentives to cutting corners. In any event, it has become part of the bedrock of private health care systems, as well as being an option under Medicare.
Where liberals once raged, now that cutting costs has become all the rage, suddenly HMO-style systems are becoming acceptable on the political Left, only by a different name. Take Massachusetts, where Romneycare is breaking the bank. So, the state is seriously pondering creating a state-wide HMO “accountable care” system to save money. From the NYT story:
Those who led the 2006 effort to expand coverage readily acknowledge that they deferred the more daunting task of cost control for another day. It was assumed then that the politics would pit doctors, hospitals, insurers, employers and consumers against one another, and obliterate the fragile coalition behind the groundbreaking coverage law. Predictably, the plan did little to slow the growth of health costs that already were among the highest in the nation.
Predictably? That’s not what they said at the time! But I digress:
A year later, the commission recommended the broad outlines of a global payment plan that essentially calls for teams of providers to be put on a budget for each patient’s care. The networks would receive an annual fee for the care of each patient, with higher payments for patients deemed to be greater health risks and with bonuses for high-quality care. In theory, the healthier these so-called accountable care organizations can keep their patients, the more reimbursement they can pocket as profit. Insurers are already required to accept all applicants in Massachusetts, as will be the case nationally, in 2014, if the new federal health care law survives its legal and political challenges.
“Accountable care organizations” is just euphemistic avoidance of what is really being proposed–HMOs. But here’s a problem: HMO systems need strong financial disincentives against abuse if they are to work properly. If the state creates the system, as opposed to the private sector, there is a pronounced danger that the regulators will be on the side of the payers instead of the patients, and the tort lawyers will be substantially moved to the sidelines–unless the U.S. Supreme Court permits suits against Medicaid cuts in a pending case, which I seriously doubt. And isn’t it amazing how the NYT reporter didn’t see the similarity between ACOs and HMOs?
Don’t get me wrong: I don’t have the same kind of problem with Romneycare that I do with Obamacare. States should have greater leeway to fashion policies that work for them best. But pay close heed here: Those who lean to the political left are now embracing the very approach to cost containment they once bitterly disdained because the government is in charge.
I get whiplash trying to keep up with these people. They turn on a dime and don’t even blush.
