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Health Care Reform:

Health Insurance & Affordable Care Act

For-Profit HMOs Don't Control Surgery Costs, Study Suggests

WebMD Health News

HMOs Don't Cut Back on Medicare Surgery

Jan. 7, 2004 -- If you're on Medicare and want expensive surgery, you're as likely to get it from a for-profit HMO as a not-for-profit HMO.

That doesn't seem entirely logical. After all, for-profit HMOs have to give their investors a return on their money. But they aren't doing it by cutting back on costly surgery for Medicare beneficiaries.

In fact, Medicare patients in for-profit HMO plans are more likely to receive some kinds of expensive operations. Harvard researchers Eric C. Schneider, MD, and colleagues report the finding in the Jan. 8 issue of TheNew England Journal of Medicine.

"Our study results suggest that for-profit ownership of health plans does not seem to lead to restrictions on high-cost surgical procedures," Schneider tells WebMD. "And the flip side of this is that there is not a lot of evidence that for-profits are more effective than nonprofits at controlling health-care spending."

That's too bad. Because HMOs are the bulwark of U.S. efforts to control health-care costs. And it's not working, says Gerald Kominski, PhD, associate director of the UCLA Center for Health Policy Research.

In response to what has been described as a managed-care backlash, managed care has loosened the reins to most services, Kominski tells WebMD. "That is one reason why we are seeing health-care costs rise so rapidly."


Some 4.5 million Medicare beneficiaries are enrolled in a managed-care plan. Schneider wondered whether for-profit plans -- such as United and Aetna -- restrict patients' access to costly surgeries more than not-for-profit plans such as Kaiser and Harvard Community Health.

Schneider's team used data from patients who in 1997 enrolled in the Medicare+Choice program through their managed care plans. They looked at whether patients in for-profit plans had less access to 12 common, high-cost surgical procedures than those enrolled in not-for profit plans.

"We were struck by the finding that for-profit plans seemed to have higher rates of use of high-cost operations across the board," Schneider says.

Kominski suggests that the Schneider team's 1997 data has captured the beginning of a trend that continues today.

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