By Trudy Lieberman
March 2003

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Making matters worse, cuts in Medicare mandated by Congress in 1997 are beginning to squeeze the incomes and profits of providers and HMOs. As a result, some HMOs no longer cover Medicare patients and have cut back on drug coverage. And some physicians are turning away Medicare patients altogether.

"Additional cuts in Medicare physician payments of the magnitude expected over the next few years are likely to increase beneficiaries' access problems," says Paul Ginsburg, president of the Center for Studying Health System Change, a nonprofit policy research group in Washington.

Throughout the 1990s managed care tried to engineer changes in the system by paying doctors to care for a group of patients and limiting the use of services. Through selective contracting with physicians and hospitals, HMOs drove down the cost of care.

"We economists are convinced that savings went straight into the paychecks of workers," says Uwe Reinhardt, an economics professor at Princeton University. "Managed care was the best hope for getting high-quality, affordable care short of having a single-payer system. But doctors unleashed a huge political backlash." Moreover, some people with valid complaints have come to view managed care as menacing.

With managed care no longer generating hoped-for savings, patients are being forced to shoulder more of the country's rising health care costs. And while evidence mounts that shifting costs to patients could prevent some people from getting care, that shift is occurring anyway. The Kaiser Family Foundation recently reported that premiums shot up nearly 13 percent last year, the highest increase since 1990.

THE PARADOX OF QUALITY
The latest gee-whiz technology is almost instantly available whether or not it has been proven effective. Yet many Americans fail to get basic preventive care like Pap smears or cholesterol screening. Twenty percent of women over age 18 have not received a Pap test in a three-year period, and about half of all adults with diabetes have not received annual eye, foot and blood pressure tests.

Even when people get the care they need, there often are problems. Eight million households have experienced a medical error that caused serious health problems, reports the Commonwealth Fund.

And while errors occur throughout the system, many occur when medicines are given in a hospital. "The system is massively dysfunctional when it comes to communication about medicines," says Carol Haraden, a vice president at the Institute for Healthcare Improvement, a nonprofit group in Boston.

There are glimpses of improvement on the quality front. The National Committee for Quality Assurance, a nonprofit group that accredits managed care plans, recently noted that HMOs had demonstrated slow but steady improvement in the quality of care they deliver. Thirteen health plans, for instance, reported that 100 percent of patients who had suffered a heart attack received life-saving beta blocker treatment.

Still, many studies of health care quality find huge gaps between the care patients need and the care they get. Quality varies by location. Doctors are paid the same whether they give poor or excellent care.

Many experts believe the way to fix this problem is to encourage doctors and hospitals to invest in systems to help them track what they are doing and give them information to improve the quality of the care they provide. Redesigning payment policies also would offer incentives to provide better care.

Equally important, Americans have yet to decide two basic issues:

• Is health care a right? Or is it a privilege for those lucky enough to have private insurance or to qualify for government programs?
  
  
• Should insurance cover everything or should it be reserved for those catastrophic health events that few can pay for out of pocket?

Until Americans reach consensus, the system will continue to push to the brink, only to fall back again leaving unhappy people, many unable to get care, along the way.

Trudy Lieberman, a veteran health care journalist, is the director of the Center for Consumer Health Choices at Consumers Union. The views expressed here are hers, not those of Consumers Union.

Now, jump into our message board to share your vision of America's health care system—but don't forget to suggest how the country would pay for it.