Health plan's impact worries HMO chiefs Regulations, costs among top concerns

October 18, 1993|By New York Times News Service

WASHINGTON -- Because President Clinton's health plan seeks to increase the number of Americans in health maintenance organizations, White House officials expected the directors of HMOs to be among the plan's most enthusiastic supporters.

But the people who run these organizations, while generally favoring the president's ideas, nevertheless express many concerns and doubts about the proposal.

The directors worry about federal regulation of their premiums, about 50 different sets of state rules, about their ability to handle a surge in membership and the difficulty of bringing poor people into their networks.

They doubt that federal payments and subsidies will cover the costs they expect when they enroll Medicaid recipients, homeless people, drug addicts and people with chronic illnesses like AIDS.

And they worry about losing the expertise that employers have developed over decades of purchasing health care for their employees. They say such employers have given HMOs the impetus to be more efficient.

Meeting in Washington last week, the medical directors of HMOs said they strongly support Mr. Clinton's goals, including medical insurance for all Americans with an emphasis on preventive care.

But, like other sectors of the health care industry, they want to shape the president's plan to address their concerns and are staking out positions in the struggles ahead.

Mr. Clinton's proposal would give all Americans a choice of joining an HMO and would create financial incentives for people to do so. Under the plan, HMOs, which provide comprehensive medical care in return for a monthly payment, would need to be certified by the states where they are operating, and states could set widely differing criteria.

For HMOs operating in more than one state, as most do, "that would be a nightmare," said D. Lee Newcomer, medical director of the United Healthcare Corp., whose HMOs serve 2.4 million people in 14 states, including Illinois, Minnesota, Ohio and Rhode Island.

Mr. Clinton is intent on preserving the states' power to regulate HMOs within a federal framework.

But Dr. Don Nielsen, associate medical director of Kaiser Permanente, the nation's largest HMO with 6.6 million members in 16 states, said, "We want a common set of national standards for certifying health plans and for reporting data in all 50 states."

Karen Ignagni, president of the Group Health Association of America, a trade group for HMOs, said, "It is not in the consumer's interest to have multiple conflicting standards."

Instead, she said, "there has to be regulatory uniformity," with the federal government setting nationwide standards in categories like financial management, the quality of care and the reporting of data.

Membership in health maintenance organizations exploded in the last decade, to 41.4 million in 1992 from 10.8 million in 1982. Doctors who work at these organizations worry about whether they can expand much faster without harming the quality of care.

Dr. Jesse Jampol, medical director of the Health Insurance Plan of Greater New York, which has more than a million members, said it would be difficult, though not impossible, to accommodate a surge in membership.

"We have 47 medical centers in New York City," Dr. Jampol said. "We don't want to dilute the quality of care by putting more people into a center than it was designed for. If we get 100,000 new patients in a year, we'll have to build another three or four centers at a cost of $8 million to $12 million apiece."

Mr. Clinton would require HMO members to pay $10 for each visit to a doctor and similar amounts for other services. Dr. Jampol's organization does not make such charges, nor does it want to.

"We are not eager to pocket little bits of money and set up a whole new system of billing and accounts," he said. "It adds to the paperwork and the bureaucracy."

Uwe Reinhardt, a health care economist at Princeton University in New Jersey, said the HMOs of today provide a model for the way health care will be delivered in the future.

"Under the Clinton plan," he said, "there will be more HMOs, and some of them will be bigger. But their profit margins will be smaller because they will face fiercer competition."

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