Nearly a decade after managed care was supposed to revolutionize the marketplace, Americans have enjoyed little or no improvement in healthcare costs, quality and access, federal officials were told last week.
That was the message from a broad spectrum of healthcare industry and consumer representatives who testified in Washington at a three-day hearing on the effects of competition on healthcare. The hearing, the first in a series to be held through October, was organized by the U.S. Justice Department and the Federal Trade Commission. The two agencies will release a report on their findings at the conclusion of the hearings.
The testimony came as spiraling costs dominated healthcare news. Hospitals once again sparred with insurers over who is to blame for soaring healthcare costs and a new report showed the nation's hospitals recorded their highest profit margins in five years (See stories, pp. 7, 15 and 16.).
Price fixing seen
Though Justice and FTC officials maintained that no single event had prompted the hearings, FTC Chairman Timothy Muris said in announcing the program last November that his agency continued to see a "wide variety of overt competitive practices in the healthcare marketplace along with some new variations."
Several cases, Muris said, involved an unprecedented number of doctors and consultants coordinating price-fixing schemes that were disguised as negotiations with health plans.
While much of last week's testimony about costs amounted to finger-pointing and self-absolution, almost all the witnesses agreed that all the changes in healthcare since the Clinton blueprint for universal coverage crashed and burned have failed to significantly upgrade the healthcare system.
"There is still a wide gap between the healthcare that Americans are getting and what healthcare could and should be," said Arnold Milstein, medical director of the Pacific Business Group on Health, a coalition of healthcare purchasers.
Tom Scully, administrator of the Centers for Medicare and Medicaid Services, told the panel that the notion of a healthcare market is something of a mirage, given the dominant role of Medicare as a healthcare payer.
Calling the CMS the world's largest price-fixer outside of the former communist governments of Eastern Europe, Scully added that only when the agency's role as a price fixer is modified will there be true competition that benefits consumers.
It didn't happen
But according to other testimony, that was supposed to happen when managed care swept through the country in the mid-'90s. Spurred on in part by opposition to the Clinton health proposal and its subsequent failure, managed care was supposed to pick up on the promises of the Clinton plan. Prices would fall, inefficiencies in the system would be corrected and excesses would be cut away, said Judy Feder, a Georgetown University professor of public policy.
There was also the promise that patients would receive better care. Yet while costs were contained in the short term and excess has been pared, quality remains a problem, with few reliable places consumers can go for information, experts said.
Indeed, the Institutes of Medicine landmark 1999 report, which said as many as 98,000 Americans die each year because of medical errors, challenges the argument that market-based healthcare will improve quality, said Thomas Greaney, a professor at the St. Louis University School of Law.
Many of the quality initiatives remain in the realm of the private market with coalitions such as the Leapfrog Group trying to encourage providers and health plans to better track outcomes and best practices and make them available to the public. Leaving quality assurance to "private regulation," said expert witnesses at the hearing, carries no assurance of better care.
Scully said his predecessors at the CMS, when it was called the Health Care Financing Administration, had tried to make provider-quality information available to the public, but the providers created a firestorm of criticism that blocked such dissemination.
Quality data offered
The CMS began trying again last year by posting quality-of-care information about nursing homes. Recently, the agency announced it will publish information about home health agencies in eight states starting in the spring, with information for all 50 states available by year-end.
In testimony at the hearing, providers pointed fingers at health plans as the main culprit for skyrocketing medical inflation, while health plans denied the allegations and suggested that greater regulation of providers by the federal government was needed to maintain proper market balance.
"While health plans' power has been used in positive ways to encourage physicians, hospitals and other providers to find ways to appropriately reduce costs, the degree of leverage now held by health plans has become overwhelming," said Jacqueline M. Darrah, director of the health law division of the American Medical Association.
Henry Desmarais, a senior vice president at the Health Insurance Association of America, countered that states already closely monitor health plan practices and despite claims of price fixing and bid rigging, plans are subject to the same antitrust laws that apply to other industries.
"In fact, there are few business activities that an insurer can undertake without having to consider compliance with an existing law or regulation," Desmarais said.
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