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HMOs Pulling Out of Managed Care for the Poor and the Elderly

It may come as no surprise to single-payer supporters that HMOs are quitting managed care programs for the poor and elderly, according to a July 6 report by the New York Times. As government cuts reimbursement rates for Medicare and Medicaid, commercial HMOs are seeing less profit. Before the cuts took effect, the HMOs rushed into managed care plans for Medicaid recipients. From less than 10 percent, or 2.7 million of the 28.3 million Medicaid recipients in 1991, they captured 48 percent, or 15.4 million of the 32.1 million beneficiaries in 1997.

Now the pullout by HMOs means shed clients must find doctors who will treat them for a Medicaid fee, get charity care or go to the emergency room or to other HMOs specializing in Medicaid clients. More and more public hospitals and community clinics are developing such programs, in effect providing a safety net in medical care, but the concern is that "the trend toward HMOs serving Medicaid patients only...portends a return to low-budget unmanaged care that large commercial HMOs helped remedy."

Single-payer supporters knew from the beginning that this "managed competition" form of providing care to the poor and elderly was inadequate. Others seem to be realizing this now as well. As the Times article says, "The withdrawals highlight the dashed expectations of both the companies, for attractive profits from Government-financed managed care, and the Government, for sharp reductions in the cost of care."