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Your money can’t use maternity benefits, that gall bladder attacks will be covered only if they occur on the first Tuesday in months that contain the letter “R” in their names. Although three-fourths of all Americans have some sort of medical insurance, that insurance pays for only about one-third of the policy holders’ medical expenses. UNDER THE HMO system, an organization in the role of, an insurer contracts with an individual patient or a family or a group or the government to provide for all health needs. The agreement is usually for a fixed annual fee of about $55 a month for a family of four. The services include complete out-patient health services primary care and specialty physician services, laboratory and diagnostic services, physical therapy and, in some plans, drugs; mental health care; home care; dental services; hospital care and surgery. Most HMO’s have night office hours and at least one doctor on duty 24 hours a day. According to Fortune magazine \(April, advantage of HMO’s is that their fixed annual fees hitch the profit motive toward a new goal in medicine: keeping the cost down. HMO’s buy drugs and other supplies in bulk. They pare expenses by operating their own diagnostic labs, having specialists on their staffs and, often, facilities for minor surgery. HMO physicians have a personal incentive to cure ailments before the need arises for expensive hospital treatment. In addition to their salaries, many HMO doctors draw a year-end bonus that depends upon how much profit or surplus the organization earns. One HMO even assesses its doctors penalty payments if there is a deficit.” HMO’s have been in operation in the United States for at least 30 years and some eight million Americans are presently enrolled in such group-practice plans. The California State Department of Health Care Services reports that when Medicaid patients shift from fee-for-service practice to prepaid group-practice plans or HMO’s costs drop by 10 to 20 percent. According to Fortune, a typical HMO saves a family of two adults and three children $115 a year in out-of-pocket costs. The Fortune article enthuses over the possibility of corporations adopting a major role in health care delivery, the possibility of revitalizing the antiquated health industry through those magical “modern management techniques.” Texas Instruments has a federal grant to design an HMO from top to bottom. In briefing Texas laws, of course, TI discovered that it can no more qualify to start an HMO than can the poor in San Antonio. TI lawyers came close to filing suit, but decided to leave such rabblerousing to MALDEF. The mere fact that defense and a er o s pace companies, like G .E., Westinghouse, Litton and Texas Instruments, are interested in getting into the HMO business is enough to make leftwingers mistrust the broad-based enthusiasm for HMO’s. The Health Policy Advisory Center, which is in the vanguard of innovative health planning, has not jumped on the HMO bandwagon. A Health/PAC Bulletin last year charged that Nixon was trying to place health care in private, corporate hands via HMO’s. “The unique thing about HMO’s is that they attract different supporters for very different reasons,” Marsha Handelman wrote in the Bulletin. “Liberals see HMO’s as an extension of progressive aspects of grbup practice. The conservatives view HMO’s as a way of shoring up the profit-making aspects of health care and entrenching it more than ever in the hands of the private sector. Both see it as a means of controlling medical inflation.” Handelman reports that many corporations doubt that HMO’s can make health care delivery a profitable enterprise. She concludes, “It is still unclear whether corporations will bite, but if they do, one thing is clear: the public can expect just about as much from HMO’s as it did from C5-A transport planes.” The American Medical Association, the conservative political arm of the physicians’ establishment, also has been critical of HMO’s. Within the medical community, of course, there are vast differences of opinion concerning the needs for innovations in health delivery. But the AMA traditionally has represented the most reactionary elements of the medical profession. It “consistently has lagged behind the temper of the time,” Dr. Mathilde Krim recently told members of the Texas Health Security Action Committee. “The physician is a small entrepreneur who has enjoyed substantial immunity from outside control,” Dr. Krim said. “He has taken it upon himself to decide how much a client can pay. He has a vested interest in the status quo.” An AMA representative testifying at a Congressional hearing in opposition to the HMO Assistance Act of 1971 questioned whether it is “universally true that early detection and treatment help the patient and reduce costs.” The AMA spokesman said that disease prevention “can be a hard proposition to sell.” And he insisted that there is “no measure of the cost effectiveness of the concept of health maintenance.” AMA news releases that year pointed out that while it’s well and good to avoid “unnecessary” surgery and treatment, HMO’s might discourage necessary treatment. The AMA would have the public believe that it’s a question of whether patients are going to be treated by Marcus Welby or Colonel Sanders. The Texas Medical Association furnished the Observer with a packet of materials concerning the AMA’s position on HMO’s. Included was a speech by Dr. Michael J. Halberstam entitled “Will Limousine Liberals Ruin Medical Care?” “My intuition,” says Dr. Halberstam, “is that truly great clinical medicine cannot flourish in a large prepaid group practice. I’m reminded of the franchise fast-food chains Kentucky Fried Chicken, Lum’s and all the others. These operations are nationwide, they buy their food in carloads, they school their employes under a standard training program, they cook food with a standard set of spices for a standard period of time. . . . I know the food won’t be great, because no one who’s really interested in preparing food would work in a place that gives him cooking instructions printed 1,500 miles away. He isn’t a cook, he’s a technician.” Dr. Halberstam concludes that HMO’s would make doctors “more or less interchangeable. I think this system can deliver barely adequate care: it cannot deliver the best care.” In a crunch, however, the medical establishment is ready and willing to accept HMO’s as long as they are fully controlled by the medical establishment. Which brings us back to San Antonio, Texas. No sooner had Congress passed the HMO Assistance Act than the Medical Society of Bexar County, the local AMA group, set up a medical foundation to corner the market on federal planning grants for HMO’s. In a letter to local doctors in 1971, the advisory committee of the Bexar County Medical Foundation explained, “The Bexar County Medical Society considered that the inclusion of either government or private industry in an undertaking of this magnitude [the establishment of HMO’s] will indeed be deleterious to the principles of the practice of medicine, not only from the economical point of view, but from the decreasing role of the doctors in administering and controlling their own destiny.” The Bexar County Foundation has received a $63,000 grant and a $121,000 grant from the Department of Health, Education and Welfare. The HMO designed by the San Antonio doctors would require the old reliable fee for service. The doctors’ HMO will not be much solace to the poor of San Antonio. According to former State Sen. Joe Bernal, “The TMAbacked Bexar County Health Organization has made a statement that they will not deal with the indigent. It’s supposed to be a health-care organization led by doctors who deal with Bexar County and eight other counties, but they won’t help the indigent and they won’t allow the indigents to organize their own help.” Bernal calls the TMA “the real bad boys” for lobbying against Consumer controlled HMO’s. UNDER TEXAS law, doctors as well as consumers are prohibited from engaging in the corporate practice of medicine. A number of bills to change all April 27, 1973 3