When Bill Clinton ran for President in 1992, one of his big campaign issues was affordable healthcare coverage. He was responding to grassroots movements for a single-payer plan similar to Canada’s.
As the idea worked its way up the Democratic party hierarchy and was batted back and forth in national media and political circles, it became watered down to an investigation of ways to “reform” the health care system. Much lobbying ensued–most of it by health insurance companies, drug companies, the AMA, and business groups worried that Clinton and Congress would require all employers to provide healthcare benefits to their employees. In the end, all that was left of Clinton’s promises was a recommendation that Americans should rely on HMOs to provide adequate, affordable healthcare coverage. Now, six years later, that HMO model is falling apart.
Take Group Health Cooperative, for example. Last year, after three continuous years of losses–$11.5 million in 1995, $7.2 in 1996, and $10.4 million in 1997–Group Health, one of the nation’s oldest and highest-rated health maintenance organizations (and a member cooperative, too–virtually unheard of among other HMOs nationwide), announced that it would merge its administrative operations with Kaiser Permanente of California. There were various reasons for the merger, among them the ability to efficiently market their services to large corporations. The reasons all boiled down to one: the need to stop losing money on its operations.
In 1998, however, Group Health has been forced to announce that next year it will increase premiums by an average of 10%. It has already increased co-payments for some members and instituted deductibles for other members. Last month GHC announced that it would stop covering state employees in Clallam County and that it would discontinue services in some counties to Medicaid recipients and members of the state’s Basic Health Plan. In addition, GHC announced that it was expecting to lose at least $10 million again this year. To try and stem the red ink, it will cut $4.3 million from its expense budget in 1999 and will not fill 300 open job positions–in other words, it will run short-staffed–to save money.
On top of all that, GHC’s partner, Kaiser, is expecting to lose $500 million this year. Last week, the two companies announced that they will disband parts of their joint administration, and Kaiser/Group Health president Phil Nudelman (former CEO of GHC) will be replaced by a Kaiser senior VP, Jim Williams, whose office is in Oakland, CA. The merger obviously hasn’t worked to stem the losses for either company … and nothing will, as long as healthcare costs continue to skyrocket.
Nor is GHC alone in its troubles. PacMed has also seen four years of red ink. The state’s Basic Health Plan has been forced to raise rates on a yearly basis, making its mission of “affordable” healthcare coverage difficult to fulfill. And other, private HMOs around the nation have been involved in merger mania: large, profitable companies swallowing up smaller, ailing ones to gain a larger market share (then raising premiums and/or slashing benefits to boost profits and satisfy shareholders). Which, of course, is the main difference between private HMOs and member coops, like Group Health–which actually tries to hold down premium levels so its members can afford coverage. But in a marketplace where everyone–whether private or non-profit–has to buy services, drugs, equipment, and supplies at a price that includes a built-in (and often indecently high) profit margin, Group Health and coops like it are fighting a losing battle.
So the HMO solution has really proved to be no fix at all. While private HMOs have shown themselves to be little different from private insurance companies (and in some cases, worse), the myth still prevails that there is no better option. More than ever, we need people to push for removing the profit motive entirely from the healthcare system. If that means starting all over at the beginning and pushing for a single-payer system all over again, then so be it. This time, let’s not be fooled that a DemoPublican President making vague promises about healthcare “reform” really has the guts to stand up to lobbyists from drug companies and the health insurance industry, or their hired guns in Congress.