Editorial: HMOs stop Medicare coverage

In the past year an increasing number of HMOs across the nation have stopped participating in Medicare, leaving almost 400,000 beneficiaries scurrying to find coverage. The HMOs have contended that low payment rates from the federal government have contributed to their dropping out, but a General Accounting Office report contends this is overly simplistic.

The GAO found that 91 percent of counties with a high payment rate experienced a withdrawal by an HMO compared with 34 percent from counties that had low payment rates. It also should be noted that while some insurers dropped out, others are seeking approval to participate, which should result in more beneficiaries having access to an HMO in 1999 than was the case in 1998. Other factors that played a greater role in HMOs leaving involved market forces, whether it was stiff competition or difficulty in establishing a large enough provider network to be successful.

Congress created the Medicare+Choice program in 1997 to expand the managed-care option for seniors and those with disabilities. In 1998 almost 7 million Medicare beneficiaries were enrolled in a plan offered by an HMO, or about 17 percent of all Medicare recipients. While the government sees cost savings through managed care, those who enroll in an HMO also like the program because these plans typically cover prescription drugs, which isn't the case if they stay with the more traditional fee-for-service plan.

Members of Congress asked for the GAO investigation because they were concerned that at the very time they were trying to persuade more Medicare beneficiaries to enroll in HMOs, these insurers were dropping out. The GAO concluded, though, that it was premature to radically change the Medicare+Choice program, a recommendation Congress should heed. Simplistic solutions, such as raising the payment rates for insurers, aren't the answer and instead could thwart the dual goal of this program, which was to offer better benefits and increase savings.

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