The cost of health care is actually falling. The expense of employee health benefits declined last year -- by 1.1 percent nationally and 1.5 percent in Maryland.
So isn't this the perfect time for our legislators in Annapolis to monkey around with the very programs that have produced these savings?
That's what the General Assembly is doing. It's on the verge of restricting the cost-effective quality-control methods of the health-maintenance organizations and managed-care plans that are revolutionizing the American health industry.
Why is the legislature intervening? Because doctors are unhappy. Individual practitioners are steadily losing patients, power and money to their more cost-effective managed-care competitors.
More and more people are abandoning the expensive traditional fee-for-service indemnity health-care system and joining HMOs and other managed-care plans. By the end of 1994, these plans enrolled 63 percent of insured American workers, up from 52 percent in 1993.
Why are these plans so successful? Because they control costs and ensure high quality. An HMO puts together a carefully selected network of competent doctors, requires them to follow specified cost-control quality-assurance procedures, and monitors their performance.
An HMO selects only the number of doctors it needs to care for its members. Doctors must compete against each other for the limited positions in the HMO physician network. In return for a dependable stream of HMO patients, they must guarantee quality care and accept lower fees.
Not every physician is able or willing to meet these exacting requirements. But the system is essential if an HMO is going to carry out its unique strategy for providing cost-effective high-quality health care.
An HMO depends on its own doctors to act as care coordinators. They monitor treatment, direct patients to appropriate specialists, assure quality and control costs.
The savings are dramatic -- as much as 19 percent -- and patient satisfaction is high. Consumers Union found that 91 percent of HMO members are satisfied with their primary-care physician, and the National Research Corporation found that HMO members are more likely to be satisfied than people in fee-for-service plans.
All of this creates an enormous problem for traditional independent physicians. Patients are abandoning them for more attractive alternatives in a free marketplace. But rather than compete on price and quality, these doctors have gone to the legislature.
Of course, they say they're doing it for their patients. They claim that HMOs and managed-care plans are "unfair" because they don't allow members to "choose their own doctors."
Last year, the state medical society pushed an "Any Willing Provider" bill. It would have required an HMO or other managed-care plan to use any doctor willing to work under the plan's procedures. The bill nearly passed, even though the Federal Trade Commission found that Any Willing Provider laws "discourage competition . . . raising prices . . . and unnecessarily restricting consumer choice . . . without providing any substantial public benefit."
This year the state medical society is pushing a similar but renamed "Patient Access Act." It would allow HMO members to choose doctors from outside the HMO's approved physician network and require HMOs to pay those doctors 80 percent of whatever fee it pays its own physicians for the same treatment.
Since HMOs pay most of their physicians a set per-member monthly fee regardless of what treatment the member receives, this requirement would cost HMOs money it otherwise wouldn't spend. The requirement would also weaken one of managed care's cost-control methods. By paying its physicians a set per-member fee, an HMO encourages preventive care and eliminates the incentive inherent in traditional fee-for-service plans to over-prescribe medical services.
Worst of all, this legislation would eliminate closed-panel HMOs as an option for people who want the substantial savings they produce. How can this possibly be justified on the ground that it expands patient choices? People already have choices. In this state, 85 percent of all HMO members could have chosen traditional fee-for-service plans if they'd wanted to pay for them.
The House version of the doctors' "Patient Access" bill would also prohibit the long- standing HMO industry practice of withholding a portion of HMO physicians' set per-member monthly fees as a protection against excessive specialist referrals or over-treatment. These withholdings require doctors to share in the financial risks of unnecessary procedures and allow HMOs to control inappropriate referrals.
There is no evidence that these withholdings result in inadequate patient treatment. Indeed, under the HMO system, doctors know that a failure to administer an appropriate medical procedure will probably result in much more expensive corrective treatments later -- treatments for which they themselves bear the financial risk under the set per-member monthly fee payment system.
Not surprisingly, the Patient Access Act would also reduce the competition among doctors for positions on HMO physician panels. If HMO members can choose their doctors from outside the HMO network, there's no incentive for doctors to compete on quality and price in order to win a place on an HMO team.
Rather than restrict HMOs just when they're bringing health-care costs under control, the General Assembly ought to tell independent physicians to go figure out some way to compete with managed care on the merits -- on quality and cost -- rather than have state government step in to protect them and the expensive traditional fee-for-service system from a free market which is finally giving Marylanders a cost-effective choice in health care.
Tim Baker is a lawyer. He has represented doctors, hospitals, an HMO and health-insurance plans. He belongs to a HMO himself.