HMO's, OK guy's, time to get yours..........

It was a helluva time. Inflation in the 20% range, price controls in place, the kids were in the streets to protest the war, crazy. Health Care was not immune. It's costs were out of control just like everything else.

One health services vendor was noticeable by it's ability to control costs in this environment.......The Kaisers. No one looked to see that they had a stable, homogeneous population that did what they were told. Anyway along came a bookish young Doctor with a plan.

His idea was to "pay people to stay well". He developed plans that offered nearly every preventative test ever needed. He advised his flock on what to do to stay healthy, gave annual physicals etc. The concept was to make the population healthier by finding disease, or at least high risk behavior, early, address it in a low cost setting, mostly with lifestyle changes and thereby reduce the need for more expensive treatments later in the disease's development.

In order to make sure the proper care is received at the proper time in the proper setting, nurse gatekeepers were invented. By terms of the plan, the enrolee had agreed only to access those services she felt were appropriate, in the setting that the plan felt appropriate and at a cost that was appropriate. In other words, HMO's could and did tell you what you could have in the way of medical services and routinely did.

HMO's were usually priced about ten to fifteen percent lower than an indemnity plan underwritten by a group insurance carrier. A group carrier wasn't providing care. They didn't then and they don't now.......they were a financing source. At the end of the year after all losses were settled, usually in excess of 90% of the premium, the left over portion after the 5% or less of premium that the insurance company charged for their services and profit. In 33 years in the business I never once saw a large contract underwritten and priced to return greater than a 2% profit.

Good ol' HMO's though, rarely returned more than 75% on the dollar. They kept the rest as expenses and profit.......more than twice the usual insurance company. After an HMO paid their expenses the rest went into the pocket of the physician owners (usually no more than three guy's), and then to the nearest Porsche dealership, with perhaps a stop at the jewelers for a gold chain or two, or maybe a bauble for the flower of the hour.

This great idea started in the seventies and boy did a lot of doctors get rich.They built up membership through marketing, rating and underwriting methods that if they were used by an insurance company would result in a one way trip to the slammer. Once one of these HMO's became large enough, the doc's took it public, making themselves multi-millionaires over night. The next step in this shell game was to sell it to a large insurance company, a group of aggregators, etc. The resulting company was manages by a bunch of guy's whose mandate was to squeeze every single possible penny out of it for the owners.

These guy's wouldn't be seen dead in a gold chain, or for that matter a Porsche. A complete change in management attitude and culture, these guys drove Mercedes and wore Phillipe Patek watches, they were professionals......and if you think the doctors gave you a working over these guy's were truly pro's and will give you a screwing consistent with that status, believe me, it'll hurt less if you point your toes in.