ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, June 4, 1996 TAG: 9606040065
SECTION: NATIONAL/INTERNATIONAL PAGE: A-3 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: R.A. ZALDIVAR KNIGHT-RIDDER/TRIBUNE
More than 80,000 elderly Medicare beneficiaries are joining cost-conscious health maintenance organizations every month, a trend that may help nudge the giant, financially troubled program toward a leaner future.
Managed care has been a key tool in private employers' efforts to slow down health cost increases by reducing unneeded procedures and promoting preventive care. Many experts believe a more extensive and better organized managed-care program should play a central role in Medicare as well.
Wednesday, the program's trustees are expected to issue a warning that Medicare's hospital trust fund will go broke by 2001, a year earlier than previously projected.
Expanding managed care was one of the options considered by President Clinton and Republican congressional leaders in last year's debate over rescuing Medicare. But the two sides failed to agree.
Meanwhile, the number of Medicare beneficiaries enrolled in HMOs increased by 25 percent in 1995, and is rising at the same rate this year. Attracted by HMOs' broader benefits, HMO members now account for more than 10 percent of Medicare's 37 million beneficiaries, up from 5 percent in 1990.
``The market is moving ahead, notwithstanding the inability to reach a policy agreement,'' said Bruce Fried, director of Medicare's managed care office. ``I have a lot of confidence that the future of the Medicare program is going to be built around managed care.''
While nearly 30 percent of working-age people and their families are in HMOs, the elderly are usually viewed as resisting managed care.
Nonetheless, HMOs have made deep inroads among retirees in California, Arizona, South Florida, Massachusetts and parts of the Northwest. They are gaining in the Mid-Atlantic states, New York, and urban areas of the South.
Medicare is basically a medical bill-paying service. Beneficiaries can go to any doctor or hospital. But Medicare doesn't pay for everything, so many retirees shell out another $1,000 or so for supplemental insurance.
Beneficiaries in HMOs give up free choice of doctor and must follow their plan's rules and restrictions when it comes to seeing a specialist or getting a diagnostic test.
But HMOs offer the elderly a more complete benefits package, including outpatient prescriptions and low out-of-pocket costs. That eliminates the need to buy additional coverage.
Although HMOs have worked to cut costs for private employers, it's far from clear that Medicare's version is saving taxpayers any money. The reason:
The government pays HMOs 95 percent of the average cost of Medicare in a beneficiary's home area, a formula many economists and health policy experts believe is too generous. The fast-growing HMO industry disputes that, and recently released a study that concludes Medicare does save money.
But health economist Stuart Altman, who has advised Congress on Medicare, said that in parts of California and Florida, Medicare overpays HMOs by as much $140 per beneficiary per month.
And that's on top of an allowance for HMO profits.
The overpayment gets plowed into alluring benefits, said Altman. Some HMOs offer health club memberships and free transportation to the doctor's office. ``It's become a gigantic bribe,'' said Altman.
Ramona Alvarez, 86, a retired cigar binder from Tampa, Fla., does not view her HMO benefits as a bribe. To her, they're more like a godsend.
Alvarez switched from traditional Medicare into an HMO a few years ago, on a frustrating day when she went to the pharmacy and found she couldn't afford her prescription.
``I pay $10 to see the doctor, and $5 for every prescription,'' said Alvarez. ``I had two surgeries, and I was in a convalescent home for five weeks, and it didn't cost me a penny.'' Low, or nonexistent co-payments and deductibles are another attraction of HMOs for people on fixed incomes.
Medicare managed-care director Fried said the government is looking at alternatives for paying HMOs. One pilot project involves competitive bidding by health plans.
Economist Gail Wilensky, who ran Medicare in the Bush administration, believes Medicare should be remodeled to look more like the federal employee health benefit plan. Under that plan, employees choose from a wide range of health-insurance options. The government pays a basic amount, and the employee makes up the difference between that and the cost of the plan selected.
``The government ought to make a fair payment, and then let people choose the kind of plan they want and pay whatever residual exists,'' Wilensky said. ``I think entering into managed care potentially could save Medicare money, but only if you restructure how you make payments.''
LENGTH: Medium: 85 linesby CNB