HMOs: Priority for Davis

HMOs and insurers are mounting a calculated effort to seize the managed care reform debate before it gallops out of their control--and that effort is by no means a bad thing. Their campaign is self-interested, but at least it provides the kind of fiscally and medically responsible framework for discussion that has so far eluded legislators.

Last week, the California Assn. of Health Plans released sweeping recommendations on how the state should go about tightening its lax oversight of managed care. Today, Sen. John B. Breaux (D-La.) and Rep. William M. Thomas (R-Bakersfield) will join business leaders to announce a national private-sector initiative to help cure the managed care crisis.

Nowhere is the lack of public leadership more of a problem than in California, whose percentage of uninsured is far above the national average. As a first step toward a solution, Gov. Gray Davis must weigh in on the 68 managed care reform bills that have passed through at least one legislative committee this session. Legislators have delayed final action on the bills until they can make out even the wispiest of smoke signals indicating which ones Davis is willing to sign.

Currently, the health care debate in Sacramento is dominated by two constituencies speaking different languages: health care providers, who are preoccupied with the bottom line and want government oversight to remain as lax as possible, and reformers, who are oblivious to the bottom line and want to mandate specific treatments and broadly expand public insurance.

Davis should not follow either extreme. His first priority should be a tough new state entity to protect managed care patients--one that oversees health care quality far more vigorously than the state’s current HMO regulator, the Department of Corporations. That agency last year spent less than half of the paltry $10.4 million it received for HMO oversight. The new overseer’s first task should be setting up panels to which patients can appeal health plan decisions. Detailed guidelines from Davis are essential, for the panels will succeed only if they are funded independently of HMOs, staffed by medical experts free of compromising ties to managed care and able to require that treatment be provided.

Next, seek fiscally responsible ways to increase access to health care. Davis, for example, should encourage the mental health parity bill that Assemblywoman Helen Thomson (D-Davis) introduced last year, requiring coverage of six severe biologically based mental illnesses, but he should oppose this year’s bloated version of the bill, with its broader mandates that might raise health care costs prohibitively. The governor should also question risky schemes like a recent proposal from state hospital and physician groups to expand the state’s health insurance program for low-income children to cover adults as well. The idea is sound, but the proposed funding source, the state’s share of the national tobacco settlement, is a rickety foundation for such a sweeping new entitlement.

There is a third constituency in the state debate, one that favors chucking the current managed care system in favor of a government-managed program of competing private plans. That federal solution has been on the political margins since the Clinton administration failed spectacularly to implement it in 1994. But it gained new currency last weekend when physician Paul Ellwood, known as the father of today’s market-based managed care system, startled a Harvard audience by saying “market forces will never work to improve quality.”

Grand revisions, however, would do nothing to protect patients in the present. That’s why Davis should act now to guide state leaders to specific, moderate and viable managed care reforms.

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No Safety Net

People ages 0-64 without health insurance

U.S.: 18.%

California: 23.8%

L.A. County: 31%

L.A. City: 37%

Average of 1995 and 1997 data.

Source: UCLA Center for Health Policy Research