The Health-care Crisis

In his otherwise extraordinarily comprehensive and insightful article on America’s health-care crisis, John Steele Gordon failed to note the emergence over the last half-century of a form of health-care delivery and insurance that has served as an antidote to some of the ills he identified—the health maintenance organization.

Since HMO care integrates inpatient and outpatient services, the tendency to “maximize the use of hospitals, the most expensive form of medical care,” has been reversed. An additional value accrues to organizations like Kaiser Permanente, in which the physicians are an integral part of the operation: doctors are less likely to “want lots of empty beds to ensure immediate admission and lots of fancy equipment.” In fact, the efficient use of resources is a hallmark of our operation.

Most important, however, is that HMOs have addressed the very real problem that “early hospital plans… paid off for illness, but not to maintain health.” Since HMOs are the insurer as well as the provider of care, we have the incentive to keep the number and cost of expensive procedures down by treating illness at its early stages and preventing it altogether whenever possible through health education and preventive medicine. This has been the cornerstone of prepaid medicine and why we’re called “health maintenance organizations.”