THE HMO ALTERNATIVE

THE SOARING PRICE of health care-more than $1 billion a day in the United States-has helped make health maintenance organizations (HMOs) an attractive alternative to traditional medical insurance. Federal regulations now require companies with 25 or more employees to offer their workers a choice between health insurance and membership in an HMO.

HMOs first became popular during the Seventies, when the federal government began trying to find ways to slow the upward spiral of medical prices. But today, HMOs typically are designed to provide most of the health care you need through one group of doctors and one clinic or hospital-at one preset payment. The money you and your employer pay to the HMO each month covers you for virtually any illness from sniffles to surgery.

By joining an HMO, you give up the freedom to shop around among doctors, and your coverage does not always travel with you if you happen to get sick or hurt out of town. Permission for emergency care at a non-member medical facility may be delayed while payment and treatment issues are ironed out. But HMO membership can help you do a better job of handling your monthly budget.

On the other hand, most standard health insurance plans will reimburse you for visits to almost any physician or medical facility of your choice. In most cases, you have to pay on the spot, then wait several days or weeks to be reimbursed, minus a deductible-typically 20 percent.

Traditional health insurance policies and HMO plans offer so many variations in coverage, cost, flexibilities and limitations that consumer experts strongly urge comparison shopping. If the HMO has a clinic, you should visit it and find out if it belongs to the Group Health Association of America. Find out if the HMO physicians are board-certified in their specialties. Check with city and state agencies for complaints against the health coverage provider, and ask co-workers and acquaintances how they rate the quality of care they have received.

A national survey conducted last year found that monthly premiums for individual health insurance policies average $65, compared with $67 for HMO policies. The cost of either medical coverage program can more than double when family members are included. And the price differential between the plans can be significant if your employer is still picking up most of the cost of traditional health insurance.

Another factor to consider: If your yearly medical expenses typically do not exceed 5 percent of your annual gross income and therefore fail to qualify as a tax deduction, paying out a little extra to belong to an HMO can end up saving you money. You and your covered family members can make repeated trips to an HMO clinic, usually with no more cash outlays except for prescriptions.

There are two main types of HMOs: group-practice HMO clinics and individual practice associations. The clinics usually offer a selection of family practitioners, pediatricians, gynecologists and other specialists under one roof. HMO plans also vary in size, from major efforts funded by big medical corporations to small regional or local enterprises.

Some critics of health maintenance organizations contend that these plans place doctors in the position of having to be bankers and company executives. They charge that HMO doctors, working with fairly predictable cash flows rather than the deep pockets of insurance companies, are tempted to cut comers on treatments. Holding down medical costs boosts their profits. But what’s good business is not always good medicine. Important health decisions, such as whether or not to give you an expensive series of tests, could take a back seat to decisions affecting the HMO’s solvency, critics argue.

A rash of complaints against several HMOs in Florida recently prompted a Florida congressman to call for a U.S. General Accounting Office investigation. The congressman charged that the medical programs had been reluctant to provide sufficient care and appeared unwilling to continue treating patients diagnosed as terminally ill. Federal investigators have found evidence that some HMO members have been pressured to quit their groups after they developed medical problems requiring treatments that were much more expensive than the amount they were paying into the plans.

Other HMO critics contend that the medical coverage programs are, in the words of one, best suited for people “who are fairly young, fairly healthy and don’t travel a lot.”

But studies by the American Medical Association and other organizations show that the quality of care at HMOs generally equals the care given by individual doctors who charge for each visit.

HMO proponents, meanwhile, point out several advantages. HMOs place high emphasis on preventive care and early diagnosis-another way to keep costs down, both theirs and yours. If you belong to a health maintenance organization with its own clinic, you won’t have to go to doctors in different parts of town. All of your medical records will be in one location.

“Some people who belong to HMOs swear by them,” says Dr. Kim Carney, a University of Texas at Arlington economics professor who is a specialist in health-care costs. “You’ve got a whole support system locked in. And HMOs do appear to help control costs.”

Dallas got its first HMO in 1979 when the Kaiser/Prudential Health Plan went into business. A year later, it had more than 12,000 members. Nationally, some 15 million people now belong to nearly 350 HMOs, and the number is expected to hit 40 million by 1990.

The five biggest for-profit HMOs are Cigna, Health America, PruCare, Maxicare and U.S. Health Care. The Dallas/Fort Worth area is served by such HMOs as Cigna Healthplan of Texas Inc., Kaiser Foundation Health Plan of Texas, North Texas Medicare Inc. and Sanus Texas Health Plan, which last November acquired another area HMO, Medcon Inc. of Fort Worth.

Some hospitals and purveyors of traditional health insurance also are getting involved in the concept. For instance, the Baylor Health Care System and about 500 private physicians in the Dallas area recently formed a joint venture, Southwest Health Plan. Executive Director Skip Housh, who helped develop a 160,000 member HMO in Illinois, says that two things make Baylor’s HMO different from most others: First, individuals can go to any member physician they choose: And secondly, member physicians are well dispersed throughout the area.

Housh says a marketing push to attract major corporations into the plan will begin as soon as Southwest Health Plan’s state license is approved. Within a year of that, Housh expects the HMO to have at least 6,000 members. Initially, Baylor employees will represent the bulk of the membership. The cost of service will be competitive: “We’ll be slugging it out right along with the rest of them.”

And Dallas-based Blue Cross and Blue Shield recently announced that it was considering an entry into the HMO marketplace.

Studies have shown that doctors associated with HMOs are less likely to recommend unnecessary tests or procedures. HMOs typically hospitalize patients less often and for shorter durations than their private-practice counterparts. Routine problems sometimes are dealt with by nurse-practitioners rather than doctors. And patients are encouraged to telephone first and seek advice before coming in for a visit.

Changes in federal regulations have opened the way for many Medicare patients to join HMOs. But HMO opponents say that some HMOs still would rather focus on trying to sign up young adults who don’t cost as much to keep healthy.

However, the people drawn to the HMO concept also could influence the plans’ emphasis, Dr. Carney says. “They often are people who already take care of themselves efficiently and don’t want to have anything unnecessary done. And HMOs tend to do well in areas where there are many new young people moving in.”