‘HMO, HIPC, Pay or Play . . . ‘ Learning Lingo of the Debate

“Play-or-pay . . . pay-or-play . . . I went to a speech therapist to try to learn to say that.”

--Sen. John D. (Jay) Rockefeller IV (D-W. Va.), December, 1992

Confused by the terminology of health care reform?

Not only do many Americans frequently confuse the terms “managed competition” and “managed care,” says Paul Starr, a Princeton sociologist and author of “The Logic of Health Care Reform,” but people are not always talking about the same thing when they use the most basic term in this debate: “national health insurance.”

What follows is a guide to some of the most commonly used terms:

NATIONAL HEALTH INSURANCE: Does not always mean a federally funded and regulated system, such as the one in Canada, even though it is frequently used to refer to such a program. Many experts, such as Starr, use this term to describe any system that would provide all Americans access to an agreed-upon standard of health care.

MANAGED COMPETITION: Organized groups of doctors, hospitals, insurers and health maintenance organizations in each region would compete for customers by offering a standardized benefit package. It is assumed consumers would favor the best plan offered at the lowest price, and thus the system would serve to control costs without price controls.

MANAGED CARE: A type of health care organization--such as a health maintenance organization (HMO) or a preferred provider organization (PPO)--that seeks to control costs by monitoring how member doctors and hospitals treat patients and by limiting access to specialists and costly procedures. Managed care organizations would play a role in managed competition.

HEALTH INSURANCE PURCHASING COOPERATIVE: Often referred to by the acronym HIPC (pronounced hip-ick), these nonprofit agencies would act as the purchasing agent for consumers under a system of managed competition in negotiating to get the best plan at the lowest cost from networks of doctors and hospitals or health maintenance organizations.

SINGLE PAYER: A Canadian-style system under which the government would pay for all health care with specially earmarked tax dollars. Government would set prices and impose regulations, but doctors, hospitals and other providers would remain in the private sector.

PAY OR PLAY: A proposal that would require all employers either to provide health insurance for their workers or to pay a tax that would enable the government to provide it.

GLOBAL BUDGETS: A technique in which the government sets an annual target or cap for all of the nation’s health care expenditures. Under the strictest type of budgeting, the government would set a national limit as well as state-by-state limits, and each state would then apportion spending among doctors, hospitals and other health care providers. It differs from price regulation, which normally regulates individual fees, not total expenditures.

INSURANCE REFORM: A number of proposals designed to change the practices of insurance companies that prevent some people from obtaining health coverage. Among other things, they would prohibit insurers from seeking only the healthiest customers, and from charging high rates based on occupation or medical history.

BENEFITS TAX: Depending on the proposal, it would either require workers to pay taxes on the value of employer-provided health benefits exceeding a certain level, or limit the tax deduction employers may now take for providing benefits. Currently, employers spend an average of $3,000 a person to provide health coverage, which is not counted as income for workers.

UTILIZATION REVIEW: A system now used by many health insurance companies, hospitals and doctors to monitor each physician’s diagnosis, treatment and billing practices. The purpose of this system is to lower costs by discouraging unnecessary treatment.