Gary Mendoza
October 29, 2003
 

At this moment, labor strikes have crippled Los Angeles County’s public transportation system and effectively shut down grocery stores throughout Southern California.  These two strikes were triggered largely by union members’ concerns over the cost of their health insurance.  Recently, the California Public Employees Retirement System (PERS) announced that its members will face another year of double digit health insurance premium increases.  At the same time, the number of uninsured Californians continues to grow.

It’s clear that California’s health care delivery system is under significant stress.  Unless new models for delivering health care are developed, health care costs and the number of uninsured Californians will continue to spiral up.

In the early 1990s, private and public employers turned to managed care as the way to control health care costs.  For awhile, HMOs were able to keep health care costs down.  Cost containment came at a price, however—growing patient and physician dissatisfaction with HMOs’ utilization controls and a deterioration in medicine’s cornerstone, the patient-doctor relationship.

As PERS’ recent HMO premium increases make clear, HMOs can no longer control health care costs.  The reason is simple—the most important participants in the delivery of health care services, patients and doctors, will not accept top-down management of health care choices that HMOs have relied upon to control costs.

To control health care costs, patients and doctors shouldn’t be treated as spectators of the utilization decisions made by others.  Instead, patients, working with their doctors, should be given more control over health care resources and a real financial stake in how scarce health care dollars are used.

If, instead of providing HMO coverage, employers gave their employees a budget to purchase health care services that met the particular needs of an individual employee and his or her family, those employer-provided dollars would, in most cases, be spent more wisely and in a manner that better met each employee’s health care needs.  If the employer also provided catastrophic health insurance, employees would remain protected from the ruinous costs of a catastrophic accident or illness.

Right now, many insured patients don’t fully trust their doctor’s advice and are insulated from the costs of the treatment options they choose.  If a doctor advises a patient that a generic drug, say ibuprofen, is a medically appropriate treatment rather than a more heavily advertised brand name drug, such as Vioxx, many patients wonder if the doctor is simply following an HMO formulary.  Often, they’ll insist that they receive the more costly and perhaps no more effective brand name drug.

If patients again trust their doctors and spend their employer-provided health care dollars as they would their own, better and more cost-effective treatment decisions will be made.  Rather than continuing to fight the movement towards patient-driven health care benefits, PERS should champion this development.

To reduce the number of uninsured California families, the cost of basic health care coverage must also be brought under control.  Unfortunately, during the past several years, policymakers in Sacramento have imposed a series of mandated benefits that, while flowing from good intentions, make health insurance increasingly unaffordable.

Our current system effectively tells poor working families "if you could afford health insurance, you’d be entitled to a strong package of health benefits".  A theoretical package of benefits does nothing, however, for people who are priced out of the market by the cost of mandated benefits they can't afford.

Our leaders in Sacramento should recognize that 80% of something is better than 100% of nothing.  If we're going to make health care more affordable for more people, employers and insurance companies should be given more flexibility in how they design health insurance benefit packages.

For much of our history, California has led the way in putting forward innovative solutions to America’s health care problems.  That same type of leadership is needed now.

Our collective health depends upon it.

Contact Gary Mendoza at: garysmendoza@yahoo.com

Gary Mendoza is one of the most prominent Latino
Republicans in the nation.  In 2002, he was the
Republican candidate for California Insurance
Commissioner.  Mr. Mendoza previously served as Deputy
Mayor of Los Angeles under Mayor Richard Riordan.  He
also served as California Commissioner of Corporations under Governor Pete Wilson.
 
 

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