HMOs Desert The Poor And Elderly

by Frederick Hecht, M.D.

(July 6, 1998) From 1992 to 1995 I worked in France. There 80% of our health care costs were paid for by the Social Security program. Yes, by the government.

The United States has generally avoided this "scary spectre of socialized medicine." Instead of dealing with the faceless government, we deal with equally faceless health care companies.

In this connection, The New York Times led off its front page today with a report by Peter T. Kilborn on the retreat of some of the nation's largest health maintenance organizations (HMOs) from the care of the poor and the elderly.

Prominent HMOs such as Pacificare, Prudential, Kaiser Permanente, Aetna U.S. Healthcare, Oxford Health Plans, and Blue Cross and Blue Shield have quit Medicare and Medicaid coverage in many different markets.

The factors cited by the HMOs include cuts in government payments. The bottom line is general operating losses. Even companies dedicated to providing health care do not like to see losses on their balance sheets.

The HMO retreat from Medicaid (the U.S. care program for the poor and disabled) has been far more pronounced than that from Medicare (the program for senior citizens). The retreat from Medicare has been mainly confined to rural communities with few patients where clinics and doctors are scarce.

Most of the HMO withdrawals from Medicaid have occurred in populous states with large pockets of urban poverty. Half of the 32 million Medicaid recipients are currently in managed health care programs. Hence, at least 16 million people, most of them among the urban poor, are affected by the HMOs cutting loose Medicaid clients.

The Medicaid clients who are shed by HMOs have a few options:

  • They can search for individual doctors willing to treat them for Medicaid fees.
  • They can look (as do the poor in the slums of Bombay) for charity health care.
  • They can go to emergency rooms or to HMOs that accept Medicaid clients.

Paradoxically, there are now more HMOs than in 1993, designed exclusively (or primarily) to serve Medicaid clients. Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, sees this trend as ominous.

HMOs that serve only the poor are unable to shift profits from serving healthier clients to the poor. When reimbursement rates are cut, the Medicaid-only HMOs become especially vulnerable. "There's no way to cost-shift," Ms. Rowland told The New York Times, "and that's where you start to see real skimping on care."

Advocates for patients fear that all of this augurs the return to crowded "Medicaid mill" clinics delivering inferior care.

France is not free of problems in health care (or employment and some other matters). But these days France is looking more humane in its care for the health of its senior citizens, its poor, and its disabled than some American HMOs.

This column, unlike other contributions to MedicineNet, has not been edited and reflects merely the views of the author.


If it weren't so sad it would be laughable. An insurance company being left with the responsibility of maintaining anybody's health. How did we ever manage to get brainwashed by them? An insurance company that has figured out how to screw subscribers out of their benefits and providers out of their reimbursement, and do it legally, is called an HMO. They do it with a little clause called "case management" that is never really defined or explained in full. That's where they get everyone contractually. I think our government is just beginning to figure out that when an HMO talks about cost control what they really mean is we control your cost by employing questionable practices, and then maximize their revenue. I teach third party reimbursement. I have a field day in the classroom! If nothing else, the course is a real eye opener!


I'm not quite sure of this doctor's opinion. As to the issue of socialized systems being better (more humane) than the American system, well, the jury is still out. France, Germany and even Canada are struggling to maintain their systems, but I wouldn't bet on any of them in the future. Privatized health care in all those countries is being discussed as a solution to their own financial problems. MY OPINION: I hope we can provide some basic level of health care to every American. Those who can afford better health care should get it by paying for it. I do. This is not a land of equal opportunity simply because you are here. You get what you earn. And you can spend it any way you want. If it's on your health, so be it.


This IS a land of equal opportunity "just because you are here," Alice. It is what our founding fathers envisioned at any rate. Freedom of Speech, Freedom of Religion, Freedom of Assembly: all of these things were founded on the belief that all men are created equal. The 11th amendment also dealt with unequal enforcement of the laws in this country as being unconstitutional. Remarkably, the legislation that our own "representatives" in government are passing is also unconstitutional because they are making the quality of a person's health care dependant on how much that person earns! I guess the modern version of our democracy would be closer to George Orwell's statement: All men are created equal, just some are more equal than others. Those who believe in democracy call it "universal coverage"; those who don't call it "socialized medicine." Right now I think you could call it "fascist medicine".