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WA Health Insurance
Robert S. Mori, CPA, President 7429 East Heather Way, Everett, WA 98203-542424
Tel.(425) 353-9763 Toll-free (877) 455-7591 Greater Seattle (206) 965-9609 Fax (425) 353-0899
WA Health Insurance
Back in the 1990's, the increases in the cost of WA health insurance were finally becoming moderated. There was mounting evidence that many WA State employers had gained some control over their WA health insurance costs Studies were done by some of the large benefit managers and CPA firms that noted that there were increases as low as 2.1 percent a year in health insurance costs and even in 1994 medical costs had actually fell by 1.1 percent. WA State Employers at that time were more concerned about rising costs than necessarily the quality of the health care or health medical insurance that hey were buying. That was exactly the point that many consumer groups pointed out. Controversy abounded since the reforms that had apparently worked best in terms of cost containment were regularly challenged on the grounds of limiting consumer choice, of threatening quality, and of taking control of medical decisions out of the hands of doctors and their patients.
Most authorities and industry leaders gave credit for the slowdown in health insurance costs in that era to the growing impact of managed care- a rather imprecise term that depending on the user, can refer to any of a wide range of financing and delivery systems. In its most general use, it can be loosely interpreted to mean any arrangement that incorporates features that distinguish it from the "traditional" indemnity insurance or service benefit by utilizing some specific controls designed to limit the cost of or access to unrestricted care. Examples include such wide-ranging items as the use of "gatekeeper" physicians pre-authorizations are required from the insurance company before procedures are approved and implemented, , active utilization review procedures, requiring second opinions on all non emergency surgical procedures, contracting for negotiated service prices with selected hospitals or physicians, or both, and promotion of preventive services. Most if not all of these controls were found in the prototypical managed care setting f the health maintenance organization (HMO).
The power of an HMO to control costs was obtained by how services were contracted with providers. A select panel of doctors and hospitals were contracted to provide a definitive and quite comprehensive set of benefits to a group of subscribers or enrollees on a prepaid basis. They would get a monthly check from the group regardless of whether or not services were rendered. Although examples of this kind of organization existed earlier, the term HMO itself was coined by Paul Elwood around 1970.
The intention of a prepaid arrangement such as an HMO was to change the incentives found in the traditional fee-for-service system. There prescribing additional services clearly added to the providers' income, whether or not it was needed by, or improved the health status of the patient. Many considered this to be a clear conflict of interest. By promising services on prepaid and fixed fee, it was reasoned, the conflict would be removed and providers would have a strong incentive to keep subscribers well (i.e., to "maintain their health") so the demand for services would not get out of control. Furthermore, it was felt that the pressure of the other participating providers would be a guarantor of quality, since the entire group's reputation could be undermined by one "bad apple."
Most Washington HMO's utilized a "gatekeeper", as they require patients to see a primary care physician (PC) and the PCP controls referrals to specialists. Indeed it was and still is not unusual to find HMO's using financial incentives to discourage PCP's from making unnecessary referrals. Not surprisingly, complaints soon arose that the new incentive was to under prescribe services, or, even worse, for the PCP to overreach his or her expertise, since it would be costly to enlist the help of a specialist, thus endangering the patient's well being. Another complaint was that patients were denied a free choice of physicians. The number of HMO providers tend to be smaller than the list of PPO providers from the same insurance company. Patients and providers often found they were on the same side of issues when it came to these complaints. Employers, too were among those most reluctant to accept HMOs when they first appears, preferring to continue negotiations over employee health plans with "traditional" insurance carriers. In part, this reflected the same reluctance to change that patients and providers felt, but it also arose, undoubtedly, from the traditional suspicion of anything that government advocated, especially after passage of the federal HMO Act in 1973.
(continued at WA Medical Insurance)