America's health-insurance revolution has reached adolescence. After more than a decade, managed-care plans--with their incentives for doctors to hold down treatment costs--cover about half the population. Fee-for-service plans--with their equally problematic incentives for doctors to provide too much costly treatment--continue to shrink. The result has been a welcome reduction in the runaway growth of medical costs and, for many people, simpler, better coverage of their real needs. But as in any adolescence, there are signs of rebellion. An ominous backlash has begun.
By now, nearly anybody who has come into contact with the system can recite a litany of horror stories: nitpicking "utilization reviews" of doctors' bills by insurance-company bureaucrats; patients hustled out of a hospital within hours, even after surgery as traumatic as breast removal; gag orders forbidding doctors to tell a patient about an expensive treatment. A recent addition: a patient rushes to an emergency room with what feels like a heart attack but turns out to be only gas pains--and gets zapped with a huge bill because his HMO will reimburse only for a "real" emergency.
The backlash is cutting across all segments. Doctors are banding together to bargain with HMOs or even offer their own health plans, and so are some unions. Employers started the managed-care revolution by herding their workers into HMOs, but now a third of companies polled by the Washington Business Group on Health express concern that the pressure to keep costs down is hurting the quality of care their employees receive.
Patients and consumer advocates are demanding that the government crack down on HMO abuses. Their complaints are being heard all the way up to the White House. President Clinton has just appointed a 34-member advisory committee to draft a patients' bill of rights and study what kind of legislation may be needed to enforce it. "Many Americans worry that lower costs mean lower quality and less attention to their rights," said the President. He was being mild. Senator Edward Kennedy, introducing a comprehensive HMO-reform bill drafted by Democrats, charged, "Too many managed-care firms and other insurance companies have decided that the shortest route to higher profits and a competitive edge is by denying patients the care they need and deserve."
Whether any national legislation will result, and when, is most uncertain. The Republicans who control Congress will not buy Kennedy's bill, and Clinton's panel will not report for almost a year. But HMOs are coming under attack from so many directions that they can no longer shrug it off. They respond by citing membership-satisfaction polls and insist that those who complain "are being frightened by inflammatory language" about rare occurrences, in the words of Susan Pisano, spokeswoman for the American Association of Health Plans.
Nevertheless, the association is promulgating a code that prohibits its 1,000 member HMOs from enforcing gag rules and employing such practices as drive-by mastectomies, on pain of being kicked out. In what looks like an if-you-can't-lick-'em-join-'em move, the association has even announced support for Clinton's panel. Pisano hopefully predicts a "thoughtful" study--leading, presumably, to mild recommendations.