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Statements Announcing JAMA Article Comparing Quality of HMOs

These statements were issued at a press conference in response to a study published in the Journal of the American Medical Association (JAMA)

Statement by Sidney M. Wolfe, M.D.
Director, Public Citizen’s Health Research Group

There are two clearly unique attributes of the American health care system which distinguish it from those in all other developed countries. First, there are, by now–mid 1999– approximately 45 million people in this country who do not have health insurance, almost one out of every six people. Related to this steadily increasing problem of tens of millions of uninsured is the second unique attribute of our system: an unprecedented amount of for-profit health services. In no other country in the world is there more than a shadow of the amount of for-profit health services being delivered in this country, such as nursing homes, hospitals and HMO’s, the subject of our paper being published in the Journal of the American Medical Association tomorrow.

As we move through the second decade of enormous growth of for-profit HMO’s, it is necessary to examine the record of this now-dominant form of HMO to see how it compares with the older not-for profit ones, some more than 50 years old. Our concern has been that with a fiduciary duty to absentee stockholders and CEO’s with bloated incomes, the financial health of for-profit HMO’s is in irreconcilable conflict with the physical health of patients. Millions of people, because they can not afford other choices, get their care from for-profit HMO’s. This study is the first comprehensive look at differences in the quality of medical care in for-profit vs not-for profit HMO’s as well as an examination of the related difference in how much money each type of HMO spends on medical care.

As alarming as the findings are, they understate the problem. In the 1996 data (submitted in 1997) we evaluated, there were 41 HMO’s whose data were omitted because they requested that the National Committee for Quality Assurance (NCQA) not publicly release their data. For the following year (1997 data submitted in 1998), the there was a significant increase in the number of HMO’s who requested their data to remain confidential, from 41 to 155, almost four times (3.8 times) as many. According to NCQA’s recently released 1998 Annual Report, the quality of the plans which allow their data to be made public is better than those who do not.

Statement of David U. Himmelstein, M.D.

Our findings published in tomorrow’s JAMA paint a clear and consistent picture. For-profit HMOs provide worse care than non-profit plans.

We analyzed all of the quality indicators collected by the National Committee for Quality Assurance (NCQA). For-profit HMOs scored lower on all 14 measures. In for-profit plans toddlers and adolescents were 12 % less likely to get immunizations; women were 8% less likely to receive mammograms, 6% less likely to get early prenatal care, 5% less likely to get post partum checkups, and 10% less likely to get pap smears. Among patients released from mental hospitals, 9% fewer got follow-up outpatient care. 27% fewer diabetics got the eye care they needed to prevent blindness, and heart attack patients were 16% less likely to get life saving beta blocker drugs. Note that care for the sickest patients – diabetics and heart attack survivors suffered most in for-profit plans.

The lower quality care in for-profit HMOs translates into unnecessary suffering and death for many patients. For instance, if all American women were enrolled in for-profit HMOs instead of non-profits, there would be 5925 unnecessary deaths from breast cancer because of the lower mammography rates in for-profits. Similarly we know that beta blockers reduce death rates by about 23 % in heart attack survivors. Yet many fewer patients get these vital medicines in for-profit plans.

Our multivariate analyses indicate that for-profit ownership per se explains lower quality. In these analyses we statistically controlled for the HMO’s location, model type and the method it used to collect data. While staff and group model plans scored better on quality than IPA and other models, and plans in New England generally had higher quality scores, for-profit ownership remained a powerful and consistent predictor of poor quality even after correcting for these factors.

We also analyzed data from member satisfaction surveys conducted for the NCQA, though these data were not included in the JAMA article. For-profit plans scored worse on 22 of the 23 satisfaction measures. Among for-profit plan enrollees, 53.9% were completely or very satisfied overall, vs. 61.8% in non-profit plans. There was no consistent difference in satisfaction between staff/group model plans and other models. The lower satisfaction in for profit plans persisted in multivariate analyses.

Why are for-profit plans worse? Despite nearly identical overall costs ($127.50 per member/month in non-profits, $128.00 per member/month in for-profits), the for-profits spent less on care and more on profit and other overhead. In for-profits, 19. 1 % of premiums went for overhead vs. 13.1 % in non-profit plans. Some of this overhead went to HMO executives. For instance, Leonard Abramson of US Healthcare/Aetna received almost $1 billion in 1996, the year covered by our data. (Compensation data for other HMO executives for 1996 is included in your packets). For-profit HMOs focus on profits not patients.

Despite worse quality and satisfaction, for-profit HMOs are increasingly dominating the market. Between 1985 and 1998 the proportion of HMO members enrolled in investor-owned plans increased from 26% to 62%. Meanwhile the market share of group and staff model plans fell from 81 % in 1980 to 12 % in 1998. Poor quality plans are winning in the market.

Our data raise troubling questions about the quality of care at the average HMO. Virtually all of the sound research comparing HMOs with fee-for-service care has analyzed nonprofit, mostly group and staff model plans – plans whose care is far better than the average HMO. Even in these relatively good HMOs, sick patients did worse than in fee-for service settings (while outcomes for healthy patients showed few differences). For instance, in the only randomized trial of HMO vs. fee-for-service care the risk of dying for sick poor patients was 21 % higher in the HMO setting. Our findings, coupled with this earlier research, indicate that the for-profit HMOs that now dominate the market provide significantly worse care than fee-for-service medicine.

For a decade, our health care system has been shaped by the market-driven policies favored by both President Clinton and the Republicans. Market-driven health care is a colossal failure. Since 1989 the number of uninsured has increased from 33 million to 43 million, while restrictive managed care plans have denied needed care to many with insurance. The push for profit is driving down quality, demoralizing doctors and nurses, and discouraging research and teaching. Health costs are again rising rapidly. It is time to reconsider non-profit national health insurance.

Dr. Himmelstein is Associate Professor of Medicine at Harvard Medical School and a Fellow of the Open Society InstitutelSoros Foundation. He practices internal medicine at The Cambridge Hospital and was a co-founder of Physicians for a National Health Program.

Quality Indicators:

Investor-Owned vs. Not-For Profit HMOs

Average rate (percent)

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Percent of Revenue Spent on Profit and Administration

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Percent of Revenue Spent on Medical Care

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