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Continuing Troubles at HMOs Promise a Wild Ride


The coming year promises a wild ride for most players in health care--not to mention consumers who depend on the industry for their health and well-being.

In California, the greatest consequences for all concerned probably will come from the continuing troubles among the medical groups around which managed care in the state is organized. Dozens of groups have gone out of business or filed for bankruptcy protection over the last two years, and more are expected to fall in 2001.

If the instability continues to the point where the system is unsustainable, health plans and regulators will have to step in and create a new structure for managed care in the state.

In the meantime, consumers whose doctor groups go out of business may find that they are temporarily without care or access to their personal physicians, as doctors, health plans and others struggle to patch the system together.

Another possibility for 2001 is more changes in Medicare managed care, a public-private system in which the federal government pays private health maintenance organizations to take care of Medicare patients.

The program, which insures 6 million seniors, has been severely battered over the last three years, mostly because of budget cuts imposed in 1997. Nearly all the commercial plans that had signed up for the program have dropped out, and those that remain face severe financial obstacles.

Congress this month passed and President Clinton signed a bill that would provide some relief to the HMOs, but the modest increase in fees is not expected to entice those that had quit the program to return.

The incoming Bush administration, whose campaign had refrained from the HMO-bashing that made it impossible for the Democrats to support more generous subsidies to the health plans, may further increase the fees paid by the federal government to the plan.

Another key issue for the next year is prescription drugs for seniors. Both parties campaigned hard on the issue, and the near-even split in Congress indicates that some form of prescription drug coverage for poor seniors may be forthcoming.

Congress also is expected to pass a patients' bill of rights next year. If the bill--as many expect--includes a provision allowing consumers to sue their health plans, the results could affect insurers and HMOs, driving down stock prices by putting them at risk for lawsuits by consumers who believe care was improperly delayed or denied.

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