Get rid of HMOs? Here's one thing that can happen:
From today's SF Chronicle: (I cut out some of the more mundane stuff)
Health care nightmare
Retirees hit hard as HMOs pull out of state's rural areas
Take the case of Bobby and Irene Dickens. The couple ran into problems finding affordable health care last March when they moved from Vallejo to Redding. The Dickenses finally found health insurance options that cost $264 a month plus another $175 for their prescription drugs. Under their old HMO plan, they paid $30.
The higher costs have dashed their dreams of traveling in their retirement. "You can't do that when you've got to pay for your medicines," said Irene Dickens, 63.
What makes HMOs a tough proposition in those markets is essentially a numbers game. HMOs rely on a system in which doctors' groups and hospitals are paid a set amount per patient each month regardless of whether that patient is seen. The theory is that with a large enough pool of patients, those patients who are healthy and hardly ever go to the doctor will subsidize the bills of those who are ill.
In rural areas, the whole system is thrown off kilter because there simply are not enough residents to make it work. Also, rural people tend to have more health problems: They are often older, sometimes poorer, and tend to be more independent and seek help after rather than before a health problem becomes serious.
"There really aren't enough people in those areas to make it possible to negotiate discounted prices," said Roger Greaves, chairman of Health Net of California. "It's a shame it's not possible to provide those kinds of services throughout the rural areas, . . . but it's not financially viable for health plans to go into rural areas."
Older residents -- including the many Bay Area people who chose to retire in rural Northern California -- often discover that their health care doesn't cover them once they move, or they have to drive hours to the nearest region that will accept their coverage, Paoli said.
"I didn't even think of there not being an HMO here. When I got up here I found there was no HMO at all," said Lorrene Henningsen, 69, who moved from outside Sacramento to Redding about a month ago.
"I moved up here not knowing what I was going to do with my health care," she said. "I knew I needed more than what I got under Medicare, and I knew I had to pay more for it."
PATIENTS SCRAMBLE
The upshot is that many people in rural areas have to switch insurers, pay higher premium and out-of-pocket costs, or possibly travel outside the area for care.
Rachel Dickerson, a 30-year-old mother of two boys in Eureka, thought her family was already paying a lot at $164 per month for a Health Net HMO. She switched to the plan earlier this year when it was first offered to her husband, a Humboldt County correctional officer, through CalPERS.
Now the family has to switch to another option, a preferred provider organization, or PPO, beginning next year, when no HMOs will be available in the area. A PPO, also a form of managed care, charges higher premiums and other costs in exchange for greater choice in physicians and treatment options.
RURAL DOCTORS JUST SAY NO
Doctors and hospitals also contribute to the anti-HMO atmosphere in rural areas. Because there tend to be fewer doctors and hospitals, there is less competition for rates. Insurers say the doctors and hospitals can refuse to accept the traditionally low reimbursement rates offered by the HMOs.
Dr. Antonio "Ben" Balatbat, an internist at the UC Davis Medical Group in Colusa, which is about 70 miles north of Sacramento, acknowledges that the lack of HMOs was one of the draws to working in a rural area because he has more control over patient care.
Balatbat said he would like to accept more HMOs because it would make his services available to more people, but he has been unable to negotiate a contract through the university.
Not everyone agrees that the cost of providing health care in rural areas is higher and that HMOs cannot work.
Steve McDermott, chief executive of Hill Physicians Medical Group Inc., a large doctors group with headquarters in San Ramon, doesn't believe that medical care is higher in those regions, because various expenses, such as labor and rents, are generally lower.
He said his group can no longer provide care to some 20,000 patients -- 12, 000 Blue Shield members and 8,000 Blue Cross members in Shasta and Tehama counties -- because of a CalPERS rule that requires HMOs that provide service in a county to make that service available to all CalPERS members.
CalPERS spokeswoman Patricia Macht confirmed the rule, but said it exists to prevent HMOs from picking some members over others.
McDermott said he believes that an HMO can work in rural areas, but he questions whether or not everyone has the right to HMO coverage in every area.
"If you're living in a rural area, you're making a conscious decision about lifestyle and access to certain services," he said. "You're going to have limited access to certain kinds of services."
