Competitive Care Health plans: more choice, not more regulation needed

Polls show that most Americans don't trust health maintenance organizations (HMOs) and want more government regulation. The public had better be careful what it wishes for - it might get it.

Before managed care, health-care costs were rising astronomically, far faster than the inflation rate. With more people now under managed care, the rate of growth has slowed - although perhaps only temporarily. That has kept health-care coverage affordable for many. It has also saved big bucks for employers, states, and the federal government.

Despite its limitations, managed care provides the only hope so far of keeping costs under control. But for the last few years, it has been under sustained attack by consumer groups, labor unions, liberals, and - talk about strange bedfellows - the American Medical Association. Victim after victim has been trotted out before the TV cameras to complain of the harm done by cheapskate HMOs who denied or delayed treatment.

Some of these are heart-wrenching stories of relatives who died or suffered unnecessarily. Others involve people who, while seriously ill, have demanded their plans pay for questionable experimental medical treatments. But they are a small percentage of cases.

As a result of this propaganda campaign, Americans have not surprisingly come to think there's a problem with HMOs. They believe, sometimes justifiably, that accountants rather than doctors are making medical decisions. Oddly enough, the polls also show that most people think something is wrong with other people's HMOs. They tend to be happier with their own.

A note: HMOs have become shorthand for managed care, but most managed-care organizations are actually "preferred-provider organizations," a somewhat different animal.

Predictably, Congress has heard the call - not too hard a task, since some there are helping gin it up to begin with. President Clinton and Capitol Hill Democrats insist on a "patients' bill of rights" allowing consumers to sue their health-care plans for damages from denied or delayed treatment. Republicans counter with a plan that would cover far fewer people and wouldn't allow for expanded lawsuits. The two sides are stalemated in the Senate.

Managed care does have some problems. The balance needs to be adjusted to give consumers a more-level playing field.

The question is how to do it. And neither the Democratic nor the GOP bill is the answer.

Just a few years ago skyrocketing malpractice costs were threatening to drive many doctors out of practice. The tort system needs fixing as it is: Hardly a week goes by without another report of some ridiculous damage award for spilled coffee or repainted BMWs. Why should we let this system loose on managed-care organizations?

A better answer would be state-administered binding arbitration, with independent medical review and fines to punish companies that stall hearings.

More government regulation will drive up premiums, undoing managed care's benefits. Fewer people will be able to afford coverage and fewer employers will offer it. Proposals for federal mandates on treatment - legislating how long mastectomy patients should be hospitalized, for starters - would make matters even worse. Those who don't like an HMO "accountant" deciding their treatment have an unpleasant surprise coming if they think a Washington bureaucrat would be better.

A long-term solution, advanced by Rep. Bill Thomas (R) of California, is to separate health-care coverage from employment. Allow individuals to buy their own health-care coverage directly or through other organizations. Make the premiums tax-deductible.

Under such a "health marts" system, health-care plans would be accountable to consumers, not employers. Carrie Gavora of the Heritage Foundation points out that a model already exists: The Federal Employees Health Benefits Plan allows some nine million people to choose from a wide range of plans annually. No one is trapped in a plan that he or she doesn't like. If customers are dissatisfied, they can leave their plan the next year and join another.

The advantages, verified by the government's personnel agency, are lower growth in costs and higher consumer satisfaction than in the private sector. Increased competition gives managed-care companies an incentive to keep consumers happy. And there's room for nonmedical or alternative treatment.

Switching to such a system is tricky and needs careful working out. But it's where Congress should be heading.

* Lawrence J. Goodrich is a Monitor editorial writer.