Hm Os: A Good Idea That Could Get A Lot Better

Health-maintenance organizations have become the target of festering hostility. To many Americans, the bad guys of the health-care system are no longer greedy, overpaid doctors but greedy, overpaid insurers. And in a sharp turnaround from the Harry and Louise days of defeat for the Clinton health-care plan in 1994, many Americans are now looking to the federal government to protect health care from the hard-heartedness of the market system.

There is indeed a role for government in making the health-maintenance industry more responsive to the needs of the public. But that is best accomplished within the context of a market system. Over the years, the U.S. has repeatedly opted for market mechanisms over government controls to determine both the price and the availability of most forms of health care. HMOs, in particular, are the outgrowth of the market system--a private response to the rising health costs imposed on employees, employers, governments, and the uninsured. And this response has had two positive effects. It has slowed the upward spiral in health-care spending, at least temporarily. And it has developed new guidelines and standards of practice that have discouraged unnecessary and even harmful medical procedures.

But haven't these benefits been purchased at the expense of overall quality in health care? Despite well-publicized and sometimes heart-wrenching horror stories about HMO behavior, there is so far no evidence that HMOs provide consistently worse care than fee-for-service plans--or consistently better care, for that matter.

What can be done to reduce individual occurrences of HMO malfeasance and to guarantee that HMOs safeguard the quality of health care? Like markets for any good or service, markets for health care work best when consumers have both choice among competing suppliers and the necessary information to make wise choices.

All too often, consumers of health care have neither, which is why an effective patient's bill of rights--not the largely toothless one passed by the Senate Republican majority--is essential. Ideally, consumers should have a choice among several competing health plans, as the old Clinton Administration health-care reform mandated. At the least, consumers should have options within a given health plan to select among different levels of care, including different levels of discretion in choosing among doctors. Health-care plans with more discretion and higher service levels would, of course, be expected to cost consumers more.

All patients must also have the right to sue HMOs for negligence and damages. This will act as a deterrent to substandard quality and fraudulent behavior on the part of HMOs. At the same time, this right should be restricted by rules requiring prior review of patient complaints by independent medical experts and limiting the size of punitive damage awards. In the absence of such rules, the drawbacks of the current medical malpractice system, including rocketing costs and frivolous lawsuits, are sure to infect the HMOs.

HEALTH-CARE SEC? Another prerequisite for well-functioning markets in health care is information. In this respect, many HMOs have been their own worst enemy, preferring secrecy over transparency in dealing with both doctors and patients. The National Committee for Quality Assurance (NCQA), a private, nonprofit organization that accredits HMOs, also provides comparative information on the structure and performance of individual HMOs. Such information is based on voluntary self-reporting by HMOs and can be withheld from the public at their request. Internal NCQA analysis indicates that HMOs that elect to release information on the quality of their performance do a better job than those that do not.

But information on HMO performance is limited, lacking in credibility, and not routinely available to all consumers. As a recent Progressive Policy Institute report argues, participants in the health-care marketplace could benefit from a Securities & Exchange Commission-type organization requiring compulsory registration and public disclosure of certain kinds of information on a timely basis by all accredited health plans. Certainly, issues concerning the availability, credibility, comprehensiveness, and timeliness of information released by HMOs should be an integral part of a patient's bill of rights.

An adequate patient's bill of rights will improve the market for health care. But society will still have to come to grips with how best to protect life and enhance human dignity in a situation of limited health resources.