Managed Care: Sacrificing Your Health Care for Insurance Industry Profits

This is the age of managed care. Big insurance companies and health maintenance organizations (HMOs) have become major forces in America, clamping down on which health care providers we can and cannot see—and when we can see them. With a health care system that delays essential treatment and puts bottom-line profit first, lawmakers should find ways to increase patients' rights—not take them away.

The Truth About Managed Care

Managed care creates a conflict of interest. Insurance companies, being businesses, naturally keep their eye on the "bottom line." Their interest is not in ensuring that you receive top quality medical attention, but in minimizing medical expenses and maximizing profits. It is a conflict of interest for the same insurance company that is focused on profits to be deciding what is appropriate medical care for you and your family. There is economic pressure for the company to choose physicians that provide less medical care and fewer diagnostic tests and referrals as opposed to more quality treatment.

Managed care forces doctors to provide less treatment. A physician who signs on with a managed care organization often is paid a flat monthly fee ("capitation") per policyholder who selects that doctor, regardless of whether that policyholder needs treatment or not. Increasingly, doctors receiving larger capitation fees are being forced to pay for any referrals, diagnostic tests or emergency care up to a negotiated maximum per patient. This policy creates an economic incentive for doctors not to provide the most thorough treatment and not to refer their patients to specialists, but instead to treat you as quickly as possible so as to not lose money.

Managed care means less care. Managed care further encourages physicians to curtail services to patients by offering financial incentives or "bonuses" to doctors who keep their medical costs down, or by withholding a portion of the doctors' pay and distributing it at the end of the year if spending was less than projected. The result? Doctors slashing the amount of time they spend with patients and patients not receiving the treatments and referrals necessary to their health.

Managed care destroys informed consent. Informed patient consent requires a physician to fully communicate to you all the medical options available and the risks involved, leaving you to be the ultimate decision-maker as to the type of treatment that's best for you. Under managed care, however, your insurance company and its reviewing panel select your treatment, thereby preventing you from choosing the care that you and your physicians deem necessary for your health. To reduce costs, the insurance industry will be inclined to decide that certain expensive procedures, such as new high- technology tests, are unnecessary. This squashes your right to choose the health care that is best for you.

The Case of Joyce Ching

Joyce Ching was a wife and mother in Agoura, California. Enrolled in an HMO, Joyce repeatedly visited her primary care doctor for three months complaining of severe abdominal pain and bleeding. Instead of seeking more information, her doctor repeatedly denied referral to a specialist because of the costs involved. In fact, her doctor received $27.94 per month to provide her health care services. A referral to the gastroenterologist she desperately needed to see would have had to have come out of the doctor's pocket—an amount that easily would have exceeded his monthly stipend for seeing Joyce. Such financial inducements can be disastrous and, in Joyce's case, proved deadly. By the time Joyce was referred to a specialist, it was too late—she soon died of colon cancer at the age of 34.

Questions You Should Ask Before Joining an HMO

• Do the HMO's primary care doctors get more money if they deny referrals to specialists, testing centers or hospitals?

• Can the HMO terminate its contract with the doctor if the HMO feels the doctor is overutilizing services or taking too much care in treating patients?

• What are the most frequently requested procedures presently being denied by the HMO on the basis of "experimental/investigative" or "not medically necessary" exclusions?

• Do primary care doctors receive bonuses at the end of the year from the HMO if they keep costs below a certain level or limit referrals to specialists or hospitals?

Updated: August 2005