The Public Policy Institute

Managing With Care

Section 1

What Do We Want From Our Health-Care System?

Health care in New York, and nationwide, remains a prime topic of public debate—both because it's so important, and because the field continues to change rapidly. That debate, unfortunately, often gets bogged down in technical issues of financing and narrow questions of whether every insurance plan will be forced to cover a new but unproven course of treatment for a small segment of the population that might (or might not) benefit. Important as those issues are, it's useful to start with some basic principles that should frame any discussion of health-care policy today.

First, what we all want: Better health, for everyone. That's easy enough.

Next is to ask what brings about better health. That's pretty well settled, too, and the answer is two things: Good medical care, with an emphasis on preventive and primary care, that is available to all. And—at least as important—healthier lifestyles.

For years, the importance of preventive care and healthier lifestyles was overlooked as we paid more attention to new medicines, advanced technology and other breakthrough treatments. But experts in the field have known for years that more visits to the doctor, more hospitals, more treatment is not always the way to make us healthier. That's one of the reasons managed care makes so much sense.

How to make New Yorkers healthier?

The ultimate measure of managed care or any other health plan is simple: How will it affect our health?

Thanks to an effort state Health Commissioner Dr. Barbara A. DeBuono launched in 1996, there's a comprehensive, well-thought-out description of what we need in order to be healthier. It's a detailed report on priority areas for public health action in New York for the next 10 years—the product of discussions among more than 1,400 New Yorkers, including public workshops throughout the state.

"This report calls upon state and local health departments to become champions of a cooperative, integrated, individual-focused health strategy (not disease strategy) in every community," the report says (emphasis in original). “Focusing on the underlying causes of disease, rather than the diseases themselves, can have the greatest impact on improving the health of New Yorkers.”(1)

As suggested by those central findings, the report repeatedly emphasizes the overarching importance of primary and preventive care—the types of things that, as is made clear in Section 3, are hallmarks of managed care.

"Lack of access to primary care results in poor health status outcomes," the Public Health Council said. “Primary care, including prenatal care, provides a prime opportunity for prevention education, early detection, early treatment, and referral to other needed health and social services. Sustained contact with a primary care provider eases the effects of long-term chronic conditions as well.”

The report goes on to say: “The hallmarks of success will be prevention, early intervention, and continuity of care through a 'medical home' for every New Yorker”

In gauging improvements in New Yorkers' access to health care, the report says, useful measurements will include such things as the number of children's hospitalizations for asthma and middle-ear infections. Those are among the types of diseases managed-care programs target the most, because they are common and can lead to significant long-term health problems.

The Public Health Council also called for increased public education about such things as the importance of preventive care, and healthier lifestyles brought about by better nutrition, more physical activity, and reduced use of tobacco, alcohol and drugs.

For most adults, HMOs and other managed-care organizations are the best available sources of such information. And that's just one illustration of why managed care is exactly what we need in health care today.

Just what is managed care, anyway?

What exactly is this thing called managed care? It can mean several different types of health plans, but they share important characteristics.

General Motors Corp., one of a number of employers that are driving more effective use of health-care dollars, uses this definition of managed care: "Strategies that create an environment where motivation and incentives reward consumers, providers and payers for behaviors that result in improved quality and outcomes of care, and productivity and cost."

"Managed care gives children and families a medical home and access to preventive medical services and early diagnosis of health problems," New York State's health commissioner, Dr. Barbara A. DeBuono, said in announcing expansion of the state's Medicaid managed-care program this year.(2)

Managed care makes sense. That's why employers and individuals choose it; that's why Congress is expanding its use in the Medicare program so cherished by senior citizens; that's why Governor Pataki and the Legislature have approved its use for Medicaid enrollees in New York.

"The mounting complaints about HMOs have tended to obscure the genuine gains that have occurred in the managed-care era—for patients, for companies, for the overall economy," U.S. News & World Report said recently. "Thanks to managed care, most Americans have more money in their pockets and may also be healthier. Thanks to managed care, more companies can afford to provide health benefits to employees."(3)

More than 5 million senior citizens in America have chosen to join managed plans for their Medicare coverage. The federal Health Care Financing Administration, which runs the Medicare program, publishes a consumer guide listing both advantages and disadvantages of joining a managed care plan.(4)

The advantages HCFA cites for managed care include these:

The Medicare agency lists two significant disadvantages of enrolling in a managed-care plan: "You may not be free to go to any physician or hospital you choose," and "You may need to have the prior approval of your primary physician to see a specialist, have elective surgery, or obtain equipment or other medical services."

These differences are rooted in the origins of the two kinds of plans. Traditional fee-for-service plans developed as a way to insure people against major health-care expenses, such as surgery and hospitalization; it was assumed that people would pay for their "normal" health-care needs, such as check-ups and routine doctor visits, largely or entirely out-of-pocket. But it turned out that people neglected routine care, while the incidence and cost of major health-care services that were paid for by insurance steadily increased. Managed care set out to turn around this costly cycle—paying up-front for more preventive care, in order to reduce the need for major interventions, while closely scrutinizing and coordinating the course of major treatments.

Sounds like a good deal—no wonder another 80,000 older Americans choose to join Medicare managed-care plans in an average month.

But if managed care is a good deal for patients, why has its image suffered so badly in the last couple of years?

There are several reasons. To be sure, HMOs and other managed-care plans have made some mistakes. The managed-care industry is relatively young; managers are still figuring out the best answers to some key operating questions. And we're all concerned about our health more than almost anything else, so issues surrounding how we pay for and receive health care are, by definition, high-profile.

Bad press for managed care

Still, those things don't entirely answer the question. Almost certainly, another important factor in that poor image is the negative—and sometimes misleading—press coverage of managed care.

A major, independent study of leading newspaper and television news reports found that, in 1997, stories that were critical of managed care outnumbered positive stories by 7 to 1. Special series in newspapers were especially critical and one-sided; 79 percent of such coverage was negative, 20 percent neutral, and 1 percent positive. The overall study, by the Henry J. Kaiser Family Foundation, examined randomly selected news stories from several major media outlets from 1990 to 1997, and found that coverage of managed care grew increasingly critical during that period.(5)

The study also found a major difference in the nature of news coverage, depending on whether a given report was negative in tone, or not.

"Critical coverage of managed care is most distinguished by its use of dramatic anecdotes, villains, and victims to vividly portray the story," the report said. "In fact, highly dramatic anecdotes seemed to be reserved almost solely for coverage with a critical tone. Of all stories using high drama, 87 percent were critical of managed care, 10 percent were neutral, and only 3 percent were positive toward managed care."

The study found that such negative, and often dramatic, coverage inevitably affects people's attitudes about managed care.

"Two of five persons (39 percent) think that newborn babies being sent home after just one day because of a managed-care plan's policy, in spite of a mother's concerns, happens 'often'; an additional third (34 percent) think that this occurs at least 'sometimes.' The anecdotal drama in the stories 'gets through,' despite the overwhelming number of other managed-care stories that contain none of these dramatic references."

In fact, however, such "drive-by deliveries" were always extremely rare. That's why, when New York and numerous other states passed laws prohibiting such actions by HMOs in recent years, managed-care plans barely bothered to object—the laws would make no discernible change in their operations.

Anecdotes on the other side of the coin—for instance, the story of the child with a problem that was caught in time because of well-baby care offered by the mother's managed-care plan—don't make the news as often, simply because they are not bad news.

Given the study's findings, its source is worth noting. The Kaiser Family Foundation is a nonpolitical, independent foundation which has sponsored numerous thoughtful studies of health-care issues (including some that reached negative conclusions about managed care).

What we need

For all the media focus on negative anecdotes about managed care, the real obstacles to better health care are well known.

"The two great, interrelated health-care problems in this country continue to be that costs are too high and, in part because of cost, a seventh of the population lacks insurance," The Washington Post editorialized recently.(6) Exactly right. Studies show that, when families and individuals don't have health insurance, they are likely to get less medical care—and to be less healthy. And, clearly, the high cost of insurance is the single biggest culprit in the high numbers of uninsured.

That's especially so in New York State—as we shall see in the next section.

1. Communities Working Together for a Healthier New York: Opportunities to Improve the Health of New Yorkers, September 1996.

2. Health Department Press release, March 13, 1998.

3. "HMOs were the right Rx," March 9, 1998; p. 47.

4. The HCFA publication is available on the Internet at http://www.cms.hhs.gov/.

5. "Media Coverage of Managed Care: Is There A Negative Bias?", Health Affairs, January/February 1998. The authors are Mollyann Brodie of the Henry J. Kaiser Family Foundation; Lee Ann Brady of the Princeton Survey Research Associates; and Drew E. Altman, CEO of the Kaiser Family Foundation. Media studied for the project were USA Today, The Wall Street Journal, The New York Times, Los Angeles Times, Cleveland Plain Dealer, Orlando Sentinel, Time, Forbes, Business Week, and selected series from five other newspapers; and ABC World News Tonight, CBS Evening News and NBC Nightly News.

6. "New Rules for Health Care," reprinted in The Washington Post Weekly Edition, December 1, 1997, p. 25. The twin problems of high cost and the uninsured are precisely those The Public Policy Institute identified nearly nine years ago in its report Cure, Or Cause? How Government Mandates Limit Access To Health Insurance.

contents introduction section 1 section 2 section 3 section 4 appendix

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