Out of Control Policy Blog

For profit HMOs aren't out to screw you?

My nifty news clips from NCPA this morning contained some startling news about for-profit health insurance.

It turns out that the market works. Waddya know.

Medicare recipients whose benefits are administered by for-profit companies are just as likely to receive such expensive procedures as heart surgery as people in not-for-profit plans, say researchers. The evidence counters claims that for-profit insurers may deny services to maximize profits.

Using Medicare data on approximately 3.5 million Medicare beneficiaries enrolled in 254 health plans in 1997, researchers found that:

o For-profit plans actually authorized more gall bladder surgeries and partial removals of the colon than non-profit plans.

o The rates for 10 other operations, such as total hip replacement, cleaning out clogged arteries, or hysterectomy were essentially the same, regardless of plan.

o Enrollees in for-profit health plans were no less likely to receive "high-discretion" procedures such as hysterectomy, than "low-discretion" procedures, such as reduction of femur fraction.

For-profit plans may focus primarily on obtaining price discounts or trimming ancillary services to reduce costs, rather than on reducing the number of procedures performed. They also may be more sensitive to adverse publicity or legal liability that might arise if they restricted the use of high-cost procedures.

This summary is based on Gene Emery, "For-Profit Health Plans Aren't Miserly About Care," Reuters, January 7, 2003.

and

Eric Schneider, Alan Zaslavsky and Arnold Epstein, "Use of High-Cost Operative
Procedures by Medicare Beneficiaries Enrolled in For-Profit and Not-for
-Profit Health Plans
," New England Journal of Medicine,
January 2004.

Adrian Moore is Vice President, Policy


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