HMO'S: So how much does an HMO spend per dollar of premium per person? Well, California recently did a study of the 15 largest HMO's in the state and showed a considerable variance- and it probably is one of the best ways to ever find the HMO you want to use.

On average, they spent 82.5 cents of each health care dollar on medical in 1996. Kaiser spent as high as 96.5% on medical care but California Care Health Plans spend only 74.3%. Here is a table of the 15.

	# of Enrollees	Spent on Medical Care	Administration	Profit
Kaiser	4,874,500	96.5%	3.0%	0.5%
Prudential	750,000	87.4	17.8	-5.3
CIGNA	705,000	86.0	14.2	-0.2
FHP	902,000	83.8	11.5	4.7
PacifiCare	1,200,000	83.6	10.7	5.7
Omni	127,000	83.5	16.2	0.4
Blue Shield	304,000	82.4	18.7	-1.1
Universal	105,000	81.7	15.4	2.9
Care America	198,888	81.9	17.4	0.7
Aetna	397,000	81.4	12.5	6.1
Health Net	1,367,000	80.1	11.6	8.3
Lifeguard	158,000	80.1	11.6	8.3
Maxicare	140,000	79.5	10.4	10.1
Foundation	602,000	77.4	16.9	5.8
California Care	2,150,000	74.3	15.2	10.5

This table is not perfect, but after just a simple review, couldn't you tell me which one(s) you would use??

HEALTH CARE (WSJ) Type of plan by all employees with health benefits.

1993 1997

Traditional fee for service 48% 15%

Preferred Provider Organization (least restrictive) 27 35

Point of Service (moderately restrictive) 7 20

Health Maintenance Organization (most restrictive) 19 30

Due to the change over to HMO's, the medical cost of living was only 0.2% in 1997 for both active and retired employees.

Average cost for employer in 1996- $3,915/employee

In 1997- $3,924.

HMO'S: 1998 There is a considerable backlash against almost all HMO's for supposedly not delivering the medical service the consumer demands. Some of this is justifiably deserved- but much is not. People fail to recognize that a lot of care by physicians under the standard fee for service has been substandard- it's just that the press finds a bigger target in exposing some problems with HMO's. Nonetheless, HMO's are under a greater and greater squeeze in trying to provide more and more under a limited budget. In past years as the industry grew leaps and bounds, profits were significant and competition limited. Much has changed. Consumers want more access to outside physicians and many facilities have offered point of service programs where members- for a higher cost- can use other physicians than under the HMO umbrella. In fact the POS has tripled in popularity during the past decade and covered over 26 million people in employer sponsored health care in 1992- up from 8 million in 1992. There are now about 37 million covered under HMO's- about 40% higher than in 1992.

Many HMO's expanded into the Medicare market- again doing quite well financially as they initially brought in some of the more healthy- and less costly- patients. However, the states subsequently reduced the payments under Medicaid to the HMO's and care for the very poor- identified in previous articles- has become unprofitable. Medicare managed care programs now cover about 11 million poor, 4 times than just four years ago. Even under Medicare, the payments are going down. Until most recently, the federal government payments to HMO's for the elderly had been rising at 10.5% annually. But last year congress reduced such increases to just 2%. Some HMO's have dropped out and others are concerned whether they can stay profitable in the marketplace. In fact, Kaiser just raised their rates 12+%.