Will HMOs’ Robust Profits Make Good Political Fodder?

As reported in this magazine last month, HMO-bashing as a campaign topic seems to have lost some luster. For instance, not much is heard these days about a patient’s bill of rights, which was supposed to make HMOs more legally accountable for denial-of-care decisions. Possibly this is because cost has so much overshadowed complaints about anything else.

Still, recent statements by Sen. Hillary Rodham Clinton suggest that health plans may not be able to fly under the radar until fall. And those who are looking for any excuse to bash HMOs will turn anything into a weapon, including a recent study pointing to healthy profits.

HMOs reported $6.98 billion in profits for the first six months of 2005, according to a report by Weiss Ratings. That is a $1.2 billion, or 21.2 percent, increase from the $5.76 billion earned during the same period in 2004.

“Despite a slowdown in earnings growth, industry profitability remains strong,” says Melissa Gannon, vice president of Weiss. “With premium rate increases leveling off, insurers will look for more innovative cost control measures to remain competitive and financially secure.”

But will they remain so secure that they won’t be targets for politicians?

“HMO bashing is certainly a seasonal sport,” says Peter R. Kongstvedt, MD, the senior executive at Accenture Health & Life Sciences Consulting. One of the reasons it’s been out of season the last few years, he says, is that actual HMO enrollment has declined and those members who are still in HMOs are relatively satisfied.

“Now we have all these other products: PPOs, CDHPs, and others that hold sway,” says Kongstvedt. “Also, a lot of the old-style HMO activities like referral authorizations, have declined as well.”

Still. . . .

“But oh my, it’s always an easy target,” says Kongstvedt. “And when the political environment calls for some good old vilification, they make a convenient ‘villain.’ Never mind that the profits being reported from these various public companies have more non-HMO business than they do HMO business.”

It’s still early in the political season. Stay tuned.

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