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The Health Maintenance Organization Act of 1973 (Pub. L. 93-222 codified as 42 U.S.C. §300e) is a United States statute enacted on December 29, 1973. The Health Maintenance Organization Act, informally known as the federal HMO Act, is a federal law that provides for a trial federal program to promote and encourage the development of HMOs. The federal HMO Act amended the Public Health Service Act, which Congress passed in 1944. The principal sponsor of the federal HMO Act was Sen. Edward M. Kennedy (MA).
Prior to the 197O’s, America’s health care system was wildly overspending and overexpanding. Indemnity insurance and government agencies such as Medicare not only paid for medical costs, but also encouraged further growth. In the 1970’s, health care expenses soared to the point where it became clear that a change in the system was needed, The change came in a form of the Health Maintenance Organization (HM0) Act of 1973, which took its main source of inspiration from the Kaiser Permanente Health Care System (MacArthur, 1997). This provision encouraged the creation of organizations that would provide managed care by completely serving all its members on the capitation basis. The capitation basis mandates that each physician receive a flat fee for each patient visited, regardless of the amount of time he or she spends with said patient (Meckler, 1999). Clearly, it can be seen that such a remuneration policy encourages physicians to spend as little time as possible with people seeking health care. Furthermore, documentation suggests that physicians with certain HMOs are even afforded bonuses at the end of the year if they save money by limiting referrals and costly procedures (Meckler, 1999). Additionally, the HM() Act of 1973, originally designed to subsidize non-profit HMO'.s and combat capitation, has had little initial impact on the system. The government was unwilling to battle the American Medical Association (AMA) in pushing the IIMO reform due to previous failures over Universal Health Care. At this point an unexpected ally of the managed care reform, corporate development, made an appearance.
Both were created when President Lyndon B. Johnson signed amendments to the Social Security Act on July 30, 1965.
The Social Security Act of 1935
The corporate world had kept a close eye on the transformation of the health care system since the passage of Medicare and Medicaid, which attracted doctors to elderly and poor patients. This form of public financing was very lucrative to investors, who already owned hospital chains and nursing homes that exploited Medicare and Medicaid for handsome revenues. Ironically, the effort's for cost containment also created opportunities for corporate development. The corporate world decided to jump in and shape the HMO reform rather than be shaped by it. Government, starved for a solution, welcomed this intervention by the for-profit sector and in 1980 President Reagan reformed the original HMC) Act of 1973 to include a fund to subsidize the establishment of for-profit HMOs (Kuttner, 1996). Now it was pressure of creating efficient, business-like management of the health care system that was undermining the traditional professional sovereignty of health care providers. Thus the HMOs, in addition to the for-profit hospitals, came under control of corporate organizations, In 1994, the Universal Health Care Plan, proposed by President Clinton, targeted for-profit health care providers as an integral portion of the medical field in the United States. With this bill, Clinton's goal was to create health alliances, made up of consumers, which would select between different providers and choose the plans they thought offered the best quality and access. These alliances would complement the already growing for-profit managed care sector in creating managed competition, as envisioned by Alain Ethoven (Kuttner, 1996). The government would subsidize the uninsured, and thus the entire country will be insured and have a choice of a provider, Unfortunately, when the Universal Health Care Plan was defeated, the system was left with business-oriented provider and an uneducated consumer.
Given this lack of governmental control the for-profit providers have invented several methods to cutting costs and thereby increasing profits. The physician working under an HMO contract is subject to a review of his or her decisions by the HMO; utilization reviews, gate keepers and financial incentives to withhold care are consistently on the minds of many physicians trying to provide both for their patients and themselves, This is a central conflict within the for-profit health care sector the dispute between the needs of the physician and the needs of the patient. Managed care's traditional goal of educating physicians about cost conscience quality care, to avoid practices such as defensive medicine, has turned into a race for the lowest possible medical loss ratio, and the highest profit. The race for profit inadvertently resulted in lower quality care, as evidenced by the special cases of HMOs. In capitation, the profit is made by providing the least possible care, and nothing is more effective in discouraging a patient's return than a distasteful experience with a provider,
worker bees can leave
even drones can fly away
the queen is their slave