Non-profit Plans Do Better Than For-profits (fwd)

rosaphil (
Thu, 15 Jul 1999 20:56:23 -0400 (EDT)

+********** Snail me yer rosehips if you liked this post! ************
*Better Living Thru Better Living!* *

Reply-To: Jeff Kirsch <>
Subject: From_Families_USA: Non-profit Plans Do Better Than For-profits

Friends: As part of the story about managed care, we thought you should know
about a new study appearing in the Journal of the American Medical Association
that looks at the the quality of care in health plans, contrasting the care
provided in for-profit and non-profit plans. As you would guess, the study
shows that non-profits do a better job. This New York Times article gives you
the story. While the study focused on care delivery, it also looked at some
cost issues. As reported in the Wall Street Journal, the study found that
while total monthly costs for members were virtually the same for both
non-profit and for-profit plans, the "medical loss ratio" -- the percentage
of revenues spent on patient care -- was 86.9% for non-profit health plans,
compared with 80.6% for for-profit HMOs.

The New York Times---July 14, 1999

WASHINGTON -- Patients enrolled in profit-making health insurance plans are
significantly less likely to receive the basics of good medical care --
including childhood immunizations, routine mammograms, pap smears, prenatal
care, and lifesaving drugs after a heart attack -- than those in
not-for-profit plans, says a new study that concludes that the free market is
"compromising the quality of care."

The research, conducted by a team from Harvard University and Public Citizen,
an advocacy group in Washington, is the first comprehensive comparison of
investor-owned and nonprofit plans. The authors found that on every one of 14
quality-of-care indicators, the for-profits scored worse.

But because the researchers favor national health insurance, some questioned
their findings.

"The market is destroying our health care system," Dr. David U. Himmelstein,
associate professor of medicine at Harvard University Medical School and the
study's lead author, said in a telephone interview. "We have had a decade or
more of policies aimed at making health care a business, and they have

Investor-owned health plans, which are typically made up of loose networks of
doctors, have come to dominate the American medical landscape in recent years.
These plans, offered by companies like Aetna, U.S. Healthcare and Cigna
Healthcare, last year covered 62 percent of all patients in HMOs, as compared
to 26 percent in 1985. Yet most research on quality of care in HMOs has
focused on traditional nonprofits, among them Kaiser Permanente, in
California, and HIP, based in New York.

The new study, which appears this week in the Journal of the American Medical
Association, analyzed quality-of-care data from 248 investor-owned and 81
not-for-profit plans in 45 states and the District of Columbia. These plans
provided coverage to 56 percent of all Americans enrolled in HMOs in 1996, the
year from which the patient
information was drawn.

Among the findings: In profit-making HMOs just 63.9 percent of 2-year-olds
were fully immunized, as compared to 72.3 percent in nonprofits. Lifesaving
beta-blocker drugs were given to 59.2 percent of heart attack patients in
for-profit plans, but 70.6 percent of patients in nonprofits got the drugs.
Diabetes patients were less likely to receive annual eye exams to prevent
blindness in profit-making plans; the figure was 35.1 percent, as against 47.9
percent in nonprofits.

The investor-owned plans fared worse, the authors said, even when all other
factors, like location of the plan, and whether the doctors were employees or
members of networks, were taken into account. While the study had certain
limitations -- it did not examine patient outcomes, for instance -- the
authors, who paid for the research themselves, said the data were the best

The study is being published just as the Senate is embroiled in a divisive
debate over how to protect patients' rights and regulate HMOs. While the
authors say the timing is coincidental, the work is already influencing the
discussion. In a statement released Tuesday, Sen. Edward M. Kennedy, D-Mass.,
who is pushing for HMO regulation, said the research "contains strong new
support for HMO reform."

But representatives of the insurance industry, which opposes regulation,
argue just the opposite. They say the study demonstrates that, even at their
worst, health maintenance organizations provide better care to patients than
fee-for-service arrangements that were common 10 years ago. 

"The best conclusion that can be drawn from this study is that managed care
is improving the quality of health care for those Americans that are covered
by health plans," said Susan Pisano, a spokeswoman for the American
Association of Health Plans, which represents both for-profit and nonprofit

Ms. Pisano also accused the authors of confusing "analysis and ideology."
Himmelstein did not dispute that he has a bias. "My bias is that for-profit
HMOs kill people," he said. 

But Eli Ginzberg, a health care economist at Columbia University who did not
participate in the study , said Himmelstein's political views did not
discredit his work.

"There is no question that he has an agenda, but I think he is reading his
data correctly," said Ginzberg, who said it was hardly surprising that
nonprofit plans deliver better care. "Let's face it, people went into the
for-profit managed care business to make bucks."

The study was made public here Tuesday at the offices of Public Citizen,
whose director, Dr. Sidney M. Wolfe, was a co-author. 

Copyright 1999 The New York Times Company

Jeff Kirsch, Field Director
Families USA
1334 G St., NW
Washington, DC  20005
Ph: 202/628-3030
Fx: 202/347-2417