Health Against Wealth: HMOs and the Breakdown of Medical Trust.

• Author: Idelson, Sarah E.

By George Anders. Boston: Houghton Mifflin Co. 1996. Pp. xii, 299. $24.95.

The Wall Street Journal is not known to harbor dissidents, yet its reporters have published two of this decade's most impassioned critiques of the status quo. The first is Susan Faludi's book, Backlash,(1) the second is Health Against Wealth by George Anders.(2) But the similarity ends there: where Backlash set out to expose and denounce a cultural backlash against women, Health Against Wealth itself adds its voice to the national backlash against managed care. Since the 1980s, when for-profit HMOs first emerged as a significant presence (pp. 60-61), the medical community has voiced concern(3) -- or worse(4) -- about managed care. The popular press, on the other hand, adopted this outlook only recently.(5) Health Against Wealth marks the official fall from grace of managed care.

Health maintenance organizations, or HMOs, have been entrusted with the care of a large and growing percentage of Americans with health care coverage: nearly seventy-five percent are enrolled in some form of HMO.(6) That percentage is climbing and may reach eighty percent by the year 2000 (pp. 13, 244). Thus, managed care appears to be a permanent force in U.S. health care delivery.

As HMOs have become entrenched, the country has begun to revolt against them. Thus far, the approach to reform has been piecemeal. Congress and many state legislatures have recently addressed areas such as length of maternity stay, mental-health-benefits parity, outpatient mastectomy, emergency-room access, and prescription drug coverage.(7) The only attempt to deal with the issue holistically was the Clinton administration's plan,(8) which failed. Instead we just deal with provisions that we find outrageous one by one, as they attract our attention and our ire. This is no way to build a better health care system. As society struggles to define what we want from our health care system and what we should demand of HMOs, we need to educate ourselves about managed care: how it works and where it fails. Health Against Wealth provides a good basis for doing this. Thoroughly researched, it sketches an unflattering portrait of the managed care industry.

By profession, Anders is a reporter, not a law professor: the book is no work of scholarship; it more accurately could be labeled a broadside.(9) Anders writes beautifully, and he writes to persuade a lay audience. By exposing -- and explaining -- what is unpalatable and even dangerous about HMOs, the author contributes to society's efforts to solve the health care crisis. In addition to providing an accessible factual and analytic basis for discussions about regulating managed care, Health Against Wealth sets out the popular basis for considering the larger problem of overall health care reform.

The book articulates no explicit moral framework, but reading between the lines permits a glimpse of the author's values -- no matter that these values are somewhat inconsistent, even irreconcilable. To the extent that Anders serves as a proxy for the general public, we can see that society's views on health care are passionately held but also complicated and contradictory. Any reformers will have to contend with this ambivalence, if not because the author has accurately captured Americans' beliefs, then because his book is influencing them.

THE CASE AGAINST MANAGED CARE

In making the case that HMOs pose dangers to patient care, Anders traces the evolution of health care delivery in the United States beginning with World War II, when U.S. employers began sponsoring health insurance on a widespread basis (p. 19), and builds up to an account of the 1980s, when managed care rose to prominence. He explains how HMOs function in order to show the risk of abuse and describes their effects on physicians and patients in order to document that abuses are occurring. In short, the argument is as follows: (1) HMOs are too powerful, (2) they can and do commit abuses, and (3) patients must mobilize to demand their due.

All-Powerful HMOs

Managed care could not have become America's "de facto national health policy" (p. 244) without the complicity of employers. When four decades of growth in health plan enrollment and in "America's immense medical machine" (p. 21) proved unsustainable, employers turned to managed care. Premiums had been rising faster than the rate of inflation, and employers insisted that health plans help them contain their spending on employee health benefits (chapter 2). In a significant role shift, health plans started involving themselves in decisions about how resources would be used and what treatment could be delivered. Patients and physicians had been accustomed to determining together what was best for the patient and then turning to the insurer for reimbursement -- "managed care amounted to a power grab by employers and the insurance industry" (p. 25). No longer would patients and physicians have sole authority to formulate treatment plans; instead, the HMO would supervise the plans, and it would influence doctors' decisionmaking to guarantee that money was wisely spent.

That a health plan has a financial interest in turning down claims should surprise no one. However, HMOs monitor and control spending far more aggressively than traditional indemnity insurers ever did. Because doctors historically have determined health-care spending (p. 25), HMOs have focused on modifying doctors' behavior to contain costs. Using mechanisms to check -- and override -- a doctor's recommendation for a particular treatment, HMOs have changed the rules of health care delivery.(10) They turn down claims prospectively: patients may be denied care if the health plan decides that it is not "medically necessary."(11)

In addition, managed care restructures incentives to align the doctor's financial interest with the health plan's -- now the doctor, too, stands to gain from withholding treatment. To give a simple illustration, capitation has been a popular way of compensating primary care doctors (p. 26). Under capitation, the doctor is paid one preset fee per patient, per month, regardless of how sick the patient and how costly the care. If the patient remains healthy and never sees the doctor, the doctor still keeps the whole capitation fee. Broadly speaking, then, managed care rewards doctors for providing less care -- so long as the patient stays healthy. In contrast, indemnity insurers' fee-for-service compensation rewarded doctors retrospectively based on the volume of care provided: the more procedures performed, the more money earned. Fee-for-service compensation gave doctors incentives to overtreat their patients and overuse...