The managed care debate: will Alaska ever see managed care? And do we want it?

• Author: Berg, Samantha

Will Alaska ever see Managed Care? And do we want it?

Once the darlings of the health care industry because of their ability to reduce costs and generate huge profits, Health Care Maintenance Organizations, better known as HMOs, have recently received a lot of negative press.

Consumers think HMOs limit their health care choices and options. Frustrated doctors say HMOs compromise patient care by allowing a third party into the healthcare decision-making process. Stories abound in the media about HMO patients who were denied access to care or who were refused life-saving treatment and drags.

The U.S. Congress is soon to be hearing legislation such as H.R. 719, the Managed Care Reform Act of 1999. According to a press release from the American College of Occupational and Environmental Medicine, "the bill would allow physicians to determine what treatment is medically needed, and it would establish an external grievance and appeal process for patients and physicians."

Because Alaska's limited population has kept its market closed to HMOs, the state has sat on the sidelines throughout much of the managed health care debate. However, many people in the medical community have started to prepare for the day when HMOs or other managed care plans possibly become part of our lives.

Traditional Indemnity Insurance

Under indemnity (or fee-for-service) plans, consumers-or more often their employers - pay a premium to an insurance company. The company pays health costs after the consumer meets a fixed deductible. Patients have freedom to choose their doctors, but the system lacks financial checks and balances.

"It's like going to the grocery store and not having to pay for your groceries," says Dave Pfeifer, CEO of Valley Hospital. "There's no hit to your pocket under fee-for-service. The consumer is not paying for the cost; the employer or the health plan is."

Restrictive HMOs

As health care costs soared in the 1980s, governments and insurance companies looked for ways to make health care plans more cost effective.

Managed care plans attempt to combine the delivery of health care services with the financing of that care. HMOs are the most restrictive of all managed health care plans.

A typical HMO assumes the risk for a large population, say 150,000 people, by pre-paying for medical services. This is called capitation. Patients choose a primary care physician from a list provided by the HMO, and physicians in the plan receive a monthly statement for each covered patient.

A primary...