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Editorial - Beyond the bottom line

July 17, 1997

A Pennsylvania study of how health-maintenance organizations handle Medicaid clients provides new evidence that the U.S. isn't close to solving the health-care issue. Until someone - the government, industry - begins looking at the whole picture instead of at separate pieces of it, solutions will remain elusive.

Pennsylvania began its two-year Medicaid experiment, called HealthChoices, on Feb. 1, requiring all Philadelphia-area Medicaid patients to enroll in one of four HMOs. But now that first-quarter financial reports are in, all are reporting losses under the program, in part, they say, because the state underestimated the huge costs involved in treating AIDS patients.

State welfare officials say the profit picture will turn around in July, when the state hikes the rates it pays these providers. Barbara J. Plager told the Philadelphia Inquirer the state needs to provide HMOs with financial incentive to take on AIDS patients.

Perhaps the state can provide the HMOs with additional incentives, but here's the problem. If everyone at every level concentrates on cutting costs in isolation, long-term solutions go begging.

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Top officials of the Journal of the American Medical Association made that point this week, releasing studies which noted that, in the recent past, significant clinical research has been done at large academic medical centers. The centers charged more, but all accepted the saltier bill because they understood that the research would lead to better treatments. Now, they say, cost-conscious HMOs are balking at the higher costs.

Broken down to its simplest terms, these top doctors are saying that the new methods needed to control costs (like those incurred by AIDS patients) may never be developed if everyone keeps looking only at this quarter's bottom line.

The doctors' solution? A federally mandated 1 percent, four-year assessment on health-care premiums to fund clinical research and a health-care summit. We'd need to know more about how cash would be spent before backing any assessment. But as for the summit, the doctors' arguments and the Philadelphia HMOs' problems have convinced us. It's time to talk.

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