Facts Often Skimpy : Health Care: A Confusion of Choices
Imagine buying a car without looking at it first. Or test-driving it. Or having any information about performance or reliability. All you’re told is the sticker price and, if you’re lucky, a list of some options.
That, according to health-care experts, pretty much sums up the way most Americans purchase health coverage today.
There is a dizzying array of health-care plans--ranging from standard fee-for-service insurance policies to a passel of new prepaid health-maintenance programs. But there is precious little public information on what policies are best for which consumers, which are sound buys and which are likely to be risky investments.
Problem Painfully Evident
That situation became painfully evident to hundreds of thousands of consumers last month when Maxicare Health Plans Inc., one of the nation’s largest and most popular health maintenance organizations, announced it was seeking Chapter 11 bankruptcy protection. Maxicare has insisted that it will be able to reorganize its financially battered operations so that it can continue to provide health-care service to about 900,000 members, a quarter of whom live in Southern California.
But consumers, in the meantime, are beginning to wonder about the financial stability of all health insurance programs and to ask questions about the quality of care available under those plans.
John Holliday, a 64-year-old salesman who lives in Anaheim, is one consumer who has been agonizing with friends and even a lawyer over whether he should make next quarter’s payment to his Maxicare plan.
While he said he has been “absolutely delighted” with every aspect of the service he has gotten from Maxicare, from the quality of the doctors to the promptness of service, Holliday knows all too well what it can mean when a health-care insurer or provider gets in financial difficulty.
“The patient is out of luck,” Holliday said. “A couple years ago I was signed up with a supplemental dental plan and had just made my quarterly payment. Three days later, the plan was out of business. And I was out of luck.”
So was Toni McClure. In February, she got a letter informing her that her HMO, Western Health Plans Inc., was shutting down some of its operations, including the one in Montclair where she was enrolled.
McClure, a 32-year-old former schoolteacher, expects to find alternative insurance for her husband and two children, but she has discovered that she probably cannot get coverage for herself. She has what is known in the insurance business as a “pre-existing condition”: she is three months pregnant with her third child.
Her situation is further complicated because her baby will have to be delivered by Cesarean section, a procedure that can run into the thousands of dollars. Although she does not like the idea of “going on welfare,” she is hoping to qualify for some assistance from Medi-Cal, the California government’s health-assistance program for the poor.
She has filed complaints with every government agency and politician she can think of, but McClure has learned, to her dismay, that there is little information and even less consumer protection in the area of health-care coverage, especially when a program goes out of business.
Holliday’s concerns and McClure’s problems are by no means unique. Buying health-care coverage, consumers are discovering, can be dangerous to your pocketbook--to say nothing of your psyche or your physical health.
Today there are dozens of companies offering hundreds of plans. The policies fall into two broad categories of coverage.
One is conventional “fee-for-service” or “indemnity” insurance in which consumers pay a premium that covers some portion of the cost of going to the doctors and hospitals of their own choice. What insurance does not cover, patients themselves must pay.
The other is “health maintenance organizations,” or “HMOs,” which go under such names as “IPAs,” “group models,” “staff models” (see accompanying glossary). For a set prepaid monthly or quarterly fee, these plans not only cover all or most of the costs of health care but provide and manage the care as well, telling the patient where to go for services, who will provide the care and what care is necessary under what circumstances.
Car, Health Costs Comparable
While most families spend about as much on car payments as they do on health premiums (somewhere between $900 and $1,500 a year, according to the Bureau of Labor Statistics), there is far more information about the automobiles Americans drive than the insurance they purchase to help keep themselves healthy.
“There just isn’t much reliable . . . or current . . . information out there,” lamented Dr. Robert H. Brook, a physician and researcher at UCLA and the RAND Corp., the Santa Monica think tank that for years has been studying various aspects of health care in America, including health insurance policies.
Even though there seem to be many options from which consumers can choose, in reality most Americans have little choice, said Nancy Collins, an independent insurance broker in Orange County for the last 16 years.
The widest range of offerings tend to be available to those who work for large corporations, which by law are now required to offer coverage and services through health-maintenance organizations, even if they already offer fee-for-service plans to employees. A close look finds that the 135 million Americans who are part of large group plans tend to have no more than three or four options available to them, according to insurance experts.
Another 14 million people are independently insured or insured through small businesses, which tend to offer even fewer choices and often at higher prices than do large corporations. About 51 million people receive their medical benefits from the federal government, including Medicare (health coverage for the elderly and disabled) and Medicaid (or Medi-Cal, as it is known in California). And an estimated 35 million Americans have no insurance; they cannot afford or do not qualify for coverage and as a result probably get little if any medical care, except in emergencies.
Whatever their options, the first question most consumers ask is almost always the same:
HOW MUCH WILL IT COST?
The simple answer, according to industry experts, is that the costs typically vary little from one type of health plan to another: A little over $230 a month for families and something under $90 a month for individuals. These are average nationwide costs. Some plans charge a little less, some demand considerably more. In all the cases, the price tends to go up as people get older and more susceptible to disease.
The greatest differences in price of fee-for-service policies and health maintenance programs occur not in the premiums but in the ultimate amount consumers have to pay to get the medical care they need. HMOs pick up all or most of the tab for medical services, whereas conventional insurance policies have deductibles, anywhere from $100 or $500 a year, and require patients to “co-pay,” that is, assume financial responsibility for usually about 20% of each bill up to a specified cap, usually $3,000 or less. Also, when fee-for-service doctors charge more than insurance policies deem reasonable, as they often do, the patient must pick up the difference.
Despite these differences, the distinctive characteristics of HMOs and fee-for-service plans are beginning to blur, analysts say. Many fee-for-service plans, for example, are becoming reluctant to reimburse for unnecessary visits to specialists. They are also imposing so-called pre-authorization requirements, meaning a patient must get approval from the insurance company before undergoing medical or surgical procedures.
Require Co-Payments
And surveys show that half of all HMOs now require some form of co-payment. That is, the HMO will not pay the whole bill but will require patients to assume some of the costs of getting medical care, typically about $3 to $5 for ordinary office visits.
In some insurance plans, there are also “low option” and “high option” alternatives to consider. But beware, industry experts warn. If the goal is to save money, the low option, which costs less and covers fewer services, can result in costing more if the patient ends up needing a lot of services. If services that are needed are not included in the plan, the patient could end up having to forgo them or pay for them out of pocket.
“Remember this,” insurance broker Collins cautioned, “if you are buying a medical plan that is 10% or 15% below everyone else on the market, you should think really carefully and then don’t be surprised if they don’t pay your bills.”
WHAT’S COVERED--AND WHAT’S EXCLUDED?
All insurance plans, whether they are fee-for-service or some form of HMO, claim to cover “basic services,” but what’s basic to one policy may not be basic to another, health-care experts warn.
What one policy considers an “emergency” may be excluded by another policy. And what a physician may consider the “best available care” for a patient with a specific disease or disorder may be considered “experimental” by many HMOs and even by some conventional insurance plans. Some of the disputed areas in recent years have included organ transplants and certain advanced laser treatments.
Perhaps the greatest differences among policies, according to independent insurance experts, occur in such areas as maternity care, dental care, eyeglasses and prescription drugs. Some policies cover these items, others do not or cover them only partially. And that is true of both fee-for-service policies and prepaid plans.
Some of the greatest controversies in coverage, particularly among HMOs, have concerned home health care. According to the Group Health Assn. of America, a trade organization of HMOs, only 63% of HMOs offer home health care, which can be critical for permanently disabled children, adults with debilitating diseases and frail elderly who have chronic ailments.
Consumers have also complained that many HMO policies are excessively restrictive in providing durable medical equipment, which includes items ranging from crutches to pacemakers.
Another area of controversy has involved mental health benefits. According to InterStudy, a Minnesota HMO think tank, 99% of HMOs offer mental health benefits. But, according to a recent article in Modern Healthcare, an industry journal, many of them are inadequate and excessively restrictive, even more so than fee-for-service policies, which have rarely, if ever, provided as much coverage as mental health professionals think is necessary.
AIDS patients have been critical of the coverage they have received from a variety of insurers, and they have been particularly displeased with HMOs for their reluctance to use new drugs and other experimental treatments, which some physicians believe are the most effective way of treating acquired immune deficiency syndrome cases.
Lawsuits have been successfully brought against an HMO in San Francisco for redlining--that is, refusing to insure people who live in certain areas where large numbers of gay men reside. Because it is so costly to care for AIDS patients, insurers acknowledge they are not eager to take on AIDS patients, although, ironically, many HMO physicians argue that their programs, which are centrally managed, are better able than others to manage such seriously and chronically sick patients.
Some Gain High Marks
In some areas, prepaid health programs get much higher marks than do conventional fee-for-service policies. HMOs, for example, are most often praised for their preventive health-care policies. Many HMOs routinely encourage adults to get annual physical exams, the costs of which are not covered by most fee-for-service policies. And HMOs typically provide routine checkups for infants, which are not covered in most fee-for-service plans.
Although there is often no way of knowing what an individual or family may actually need in the way of care, the advice most experts give is for consumers to talk to others who have been enrolled in the plan. Did it do what it promised? Did it pay for everything you thought it would?
WHAT KIND OF COVERAGE TO CHOOSE?
“It’s awfully hard to say what kind of patient ought to go where,” said Harold S. Luft, a health-care economist at the UC San Francisco.
Like many experts who have studied the differences among the various HMO and fee-for-service policies, Luft has concluded that, while there are no definitive answers, there are many factors that consumers should take into account before making their final decisions.
One important question to ask is who drops out of plans and why. If the dropout rate is in excess of 30%, experts say, that could mean trouble. Consumers can demand such information from their employers or get it directly from insurance companies and HMOs, which are required by most states to make the information public.
In many cases, preferences for one type of plan over another depend on a person’s age, income and life style.
If a person is young, childless and healthy, for example, he or she may not mind some of the disadvantages of HMOs, including the delays that are often reported in getting appointments and the tendency of some plans to rotate physicians frequently. On the other hand, a young, healthy single person may well pay more into an HMO than he gets out of it.
Families with small children may well prefer HMOs because there is often little or no charge even for frequent or routine office visits. On the other hand, if there is too much red tape in getting the care or if there are delays on the phone or in the waiting room, working parents may be more satisfied with a well-run fee-for-service operation.
HMOs Do Well for Some
Individuals or families who are relatively poor but healthy seem to do well in HMOs, but people who are poor and sick seem to run a risk of falling through the cracks of managed systems, according to a comparative study of HMOs and fee-for-service policies conducted by the RAND Corp.
Some elderly patients complain that they are unable to find HMOs that will take them. Other elderly patients say they are not interested in prepaid health plans because they already have long-term relationships with a doctor whom they do not want to give up.
In 1987, Sen. John Heinz (R-Pa.) issued a report detailing aggressive and deceptive sales pitches aimed at elderly patients by unscrupulous HMO salespeople. More recently, a number of HMOs have been accused of raising premiums, cutting benefits and dropping Medicare patients. As a result, the American Assn. of Retired Persons’ magazine, Modern Maturity, has warned members to take a “hard look” at HMOs or any insurance plan before joining.
MOST POPULAR FORMS OF COVERAGE
Although it is probably neither a measure of financial stability nor of medical quality, certain types of coverage seem to be more popular with consumers than others.
In fact, two-thirds of both HMO members and fee-for-service subscribers have been pleased with the care they receive, according to a 1988 survey by the Health Insurance Assn. of America, a national organization of health insurance companies. Somewhat less satisfied have been members of preferred provider organizations, only about half of whom have been satisfied with what are essentially traditional insurance policies in that they allow patients to select their own doctors but charge a penalty if the patient selects a doctor that is not on an approved list.
Of all HMO types, the one with which employers and employees alike have the fewest problems is the individual practice association, whose members use private doctors in their own offices instead of staff doctors in a central clinic, according to a 1989 study by researchers at Johns Hopkins University and the Health Insurance Assn. of America.
Yet, insurance analysts caution, popularity may not be a sign of success. Although the IPA approach may well have become the most popular form of health-care delivery, insurance surveys have suggested it may also be the least financially sound. Because it is so loosely organized and less able to control costs, they say, it may be the most likely of all HMO types to go out of business.
Doctors’ Preferences Sought
What type of services do doctors like best? Although there seems to be little if any difference in the overall quality of physicians who elect to work in HMOs as compared to those who go into private practice, there are enormous age differences. Relatively few older doctors are involved in HMOs, but according to a recent study by the American Medical Assn., 40% of male doctors under the age of 35 and 60% of young female doctors are now working in HMOs.
HMOs are a way for physicians to practice medicine without having to deal with the administrative headaches and costs of running their own offices. But not all physicians are pleased with what they find inside HMOs.
Writing in the New England Journal of Medicine, one physician described recently what he saw as chronic problems of some HMOs: “inept telephone reception and patient scheduling.”
In a private conversation, another physician, an oncologist from Denver, said he was initially sold on the concept of HMOs. But he dropped out of the system and set up his own practice when he realized that cost-containment efforts were forcing him to inform patients “in record time” that they had cancer so that he could “move on to the next patient.”
“My decision had nothing to do with the quality of medical care that the system could provide, but it had a great deal to do with personal aspects of doctoring that I still feel should be part of medicine,” the doctor said.
WHAT SYSTEM PROVIDES THE BEST CARE?
While it might be possible to evaluate health insurance on the basis of popularity polls or from a financial standpoint, independent health-care experts say they know very little about the quality of medicine that is provided under the various forms of health insurance in the United States today.
Several studies, based on data collected by the RAND Corp. in the late 1970s, have shown that HMOs provided care to middle-class consumers as good as, if not better, than the service obtained through private doctors under fee-for-service insurance programs--and they have done so at a 25% cost saving.
The researchers themselves acknowledge there are problems with these studies, however. They involve only a small number of older, highly reputable programs which are not representative of all HMOs, and they rely on data that are nearly a decade old and do not reflect the highly competitive environment that exists today in the health insurance industry.
Many experts believe it is important for patients to know how their health plans are organized so they can try to use the system wisely.
For example, since fee-for-service physicians have a financial incentive to do as much as possible for patients, it might be prudent for patients to question whether any given procedure is really necessary. In prepaid systems, however, doctors are often rewarded for holding down costs so that patients might be well advised to demand more services and to seek second opinions if they think they are not getting the care they need.
WHAT IF SOMETHING GOES WRONG?
What if your health plan does not pay your medical bills? What if you think you have been misdiagnosed or mistreated by a doctor? What would happen to your health-care coverage if you were to get a divorce? Or change jobs? What if your health provider goes out of business? Do you have any assurance that you will be covered by another policy?
These and countless other questions plague consumers of health-care insurance every day. In some cases, there are answers, although not always satisfactory ones.
You can, for example, sue a doctor or an HMO for malpractice, even if you have signed papers waiving your right to sue. (Some doctors and health-care groups require patients to sign such documents simply as a means of discouraging litigation.)
If your family status changes or you go to work for a large corporation, you should be able to get coverage through another large group plan, whatever your medical history. But if you are self-employed or transfer to a small company and have a pre-existing condition, such as pregnancy, or a history of health problems, you may find that no insurance company will take you on as a customer.
If your insurer wants to drop you because you have become older or for some other reason become a high risk, the company must, under state and federal requirements, find new coverage for you. If it is trying to reorganize itself, as Maxicare is doing, and wants, for example, to shift some of its operations from one area to another or pick up some new clients and discontinue others, it must also seek new coverage for any clients who are left behind. But if the insurance company or HMO should go out of business, as some companies have done in recent years, insurance authorities say there is no way of forcing the defunct organization to do much of anything.
Avenues for Complaints
At both the state and federal level, there are government agencies that regulate insurers and respond to consumer complaints. (See accompanying directory.) But government officials admit there are too many loopholes in the law and too few government auditors to protect the consumers’ interests in all cases.
The important thing, experts say, is to learn as much as possible in advance of putting down money on any policy. While it may not always be possible to predict which policy will be best under what circumstances, in most cases consumers can make some intelligent estimates of whether they are getting health-care coverage that is the industry’s version of a Ford, a Cadillac--or a clunker.
ENROLLMENT IN GROUP HEALTH PLANS These 1988 figures from the Health Insurance Assn. of America reflect the percentages of American workers enrolled in various types of health-insurance programs, according to a survey of employers. Managed Fee-for-Service Plans--: 43%
Unmanaged Fee-for-Service Plans--: 28%
Health Maintenance Organizations--: 18%
Preferred Provider Organizations--: 11%
COMPLAINING ABOUT THE HEALTH CARE SYSTEM To complain about indemnity or fee-for-service insurance plans
(as well as Health Net and Health Plan of America) :
CALIFORNIA DEPARTMENT OF INSURANCE
600 South Commonwealth Ave., Los Angeles 90005
(800) 233-9045 (toll free)
To complain about most pre-paid or health-maintenance organizations:
DEPARTMENT OF CORPORATIONS
Division of Health Care Service Plans
6100 South Commonwealth Ave., 16th Floor, Los Angeles 90005
(213) 736-2741
To complain about Medicare or federally regulated HMO organizations:
HEALTH CARE FINANCING ADMINISTRATION
Room 4360, Cohen Building
330 Independence Ave. S.W.
Washington, D.C. 20201
(202) 245-0843
California office:
100 Van Ness Ave.
San Francisco, CA 94102
(415) 556-0254
To complain about PHYSICIANS, request a complaint form from one of these offices:
BUREAU OF MEDICAL QUALITY ASSURANCE
1430 How Ave.
Suite 85-A
Sacramento 95825
(916) 920-6013
20631 Ventura Blvd.
Suite 201
Woodland Hills 93164
(818) 713-0124
21171 Western Ave.
Suite 120
Torrance 90501
(213) 320-8530
To complain about about HOSPITALS, look for a local field office of:
DEPARTMENT OF HEALTH SERVICES
Licensing and Certification Division
714 P Street
Room 1376
Sacramento 95814
(916) 445-1967
Los Angeles office:
313 North Figueroa Street
Room 317
Los Angeles 90012
(213) 620-2940
UNDERSTANDING HEALTH CARE TERMS FEE-FOR-SERVICE--The form of health care provided under a so-called indemnity insurance plan. Consumers are allowed to go to the physician or hospital of choice. They pay monthly or quarterly premiums and are required to pay the first $100 to $500 worth of medical bills each year--the deductible. Patients must also co-pay each bill--that is, assume responsibility for some portion, typically 20%, of doctors’ and hospital charges up to a specified limit, usually $1,000 or more. Allowable charges above that level are usually fully covered by the insurance company.
MANAGED CARE--A fee-for-service insurance plan that typically offers lower premiums than an unrestricted plan, but imposes some additional restrictions, such asa requirement for advance approval of elective surgery or hospital admissions.
PPO--A Preferred Provider Organization is essentially a fee-for-service system in which patients choose their own physicians but must make their selection from a list of doctors who are under contract with the organization to provide services at discounted prices. Patients pay deductibles and make co-payments but the costs are usually lower than under conventional fee-for-service policies. Patients who go outside the system for care will still be reimbursed but at lower rates.
HMO--An Health Maintenance Organization, also known as a pre-paid health plan or a pre-paid group practice plan, is essentially a mechanism both for insuring patients against the costs of health care and for providing that care. Services range from office visits and medications to surgery. One type of HMO, known as a group or staff model, typically uses full-time, salaried physicians to provide medical services in a central location; the HMO may have its own hospitals. Other types of HMOs contract with physicians or groups of physicians to provide care in their personal offices and in community hospitals. Patients may be limited in the number and types of procedures they can receive and may not always get to see the physician or specialist of their choice.
IPA--An individual practice association is essentially an HMO without walls. Groups of fee-for-service doctors contract to provide care for patients who sign up with the plan. Patients choose a primary physician who acts as a gatekeeper in deciding on needed services and referrals.
