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HMOs: The Health Care of the Beast



Many people are concerned about rising health care costs. In reaction to this, some individuals and companies are gravitating

toward the assumed lower prices of Health Maintenance Organization (HMO) health plans. HMOs spend billions of dollars

each year advertising their low cost services. While these savings look good on paper, there are many pages of small print. The

explanation after the asterisk indicates that not only do the HMOs lack lower costs, but they also short-change the patient in

quality care. Much of the money spent on premiums goes directly into the pockets of stockholders and less is then available for

patient care. In addition, the main clinical decisions are made not by doctors, but by a board of directors more interested in the

bottom line than in little Jennie's cough. When the facts are considered, HMOs should not be permitted to assume the role of

the primary medical care-givers.



Traditional insurance companies and HMOs have comparable premium rates. HMOs are too profit oriented and, because of

this, their patient care lacks in quality. One way that HMOs cut their costs is to spend less on direct care. As opposed to

fee-for-service (FFS) companies, patients relying on their HMO spend 17 percent less time in the hospital regardless of the

degree of their illness. This said, patients in Medicare HMOs also spend about 17 percent less time than they would in a

traditional setting. It is surprising that, in spite of this fact, Medicare patient risk contracts actually cost Medicare 6 percent

more than they would have if done in a fee-for-service setting. (Rice, 79-80) The lack of savings is not limited to Medicare

recipients. Spending on health care in California, which has one of the highest...