Program on International Policy

Americans on Health Care Policy

August 30, 2000

9. Managed Care

Despite their concern about costs, Americans show a reluctance to accept limitations on health care. One reason for this resistance is a growing belief that managed care’s recent efforts to control costs have resulted in a lower quality of health care without a significant reduction in costs. The health care industry is perceived as not passing on the profits of existing cost-cutting measures and making inordinate profits while continuing to be relatively inefficient. Thus, confidence in managed care is low. A strong majority favors more government regulation of managed care and a "patients’ bill of rights" to roll back some of the cost-cutting measures of managed care.

In the mid-1990s, following the failure of the Clinton plan, managed care was widely introduced as a major means to control costs. Initially, most Americans greeted this new approach positively. However, several series of polls show this support has dramatically eroded.

Louis Harris asked in 1995:

Given what you know, on the whole do you think this trend away from traditional fee-for-service coverage and toward more managed care is a good thing or a bad thing?

In 1995, 59% said it was a good thing, while just 28% said it was a bad thing. However, this support has eroded every year since. Most recently, in July 2000, 37% said it was a good thing, while a slight majority of 52% said it was a bad thing.77


Perceived Erosion in Quality of Care

Increasing numbers of Americans believe that managed care harms the quality of care. In the July 2000 Harris poll, a majority (59%) said "the trend toward more managed care" would "harm the quality of medical care" people like them receive, while less than three in ten thought it would improve quality. This sharply contrasts with the early enthusiasm. In 1995, a plurality (48%) thought managed care would improve quality rather than harm it (39%).78

A number of other surveys confirm this trend. A recent Kaiser question asked whether "HMOs and managed care have increased or decreased the quality of health care for patients." In April 1999, a 56% majority said quality had been decreased, up from 45% in September 1997.79 A July 1999 CBS News poll also reported that 56% believed "more people belonging to HMOs and other managed care plans" had "harmed the quality of medical care" ("improved," 20%).80 In May 1999, a Belden, Russonello & Stewart survey found that 60% believed "HMOs, PPOs, and other managed care plans" decreased "the quality of health care for patients" (increased, 28%).81 A Market Strategies survey taken in June 1998 presented two arguments and found that 57% agreed that "the shift to managed care…has been a bad thing because the quality of care has suffered because doctors have to be careful of costs," while only 30% agreed that the shift "has been a good thing because it has provided more affordable health insurance."82 Finally, a three-way CNN/Time poll from July 1998 found that those who believed "managed care providers" had made the quality of care worse outnumbered those who felt such plans had improved quality by almost two to one (37% to 19%). Another 31% thought quality had not changed one way or the other.83

There seems to be a widespread public perception that managed care, in an effort to cut costs, has negatively altered the relationship between doctors and patients. In three polls since 1997 – most recently in April 1999 – Kaiser/Harvard surveys have found a strong majority (61% to 64%) believes "HMOs and managed care plans" have "decreased" the amount of time doctors spend with their patients."84 In a three-way June 1998 NBC/Wall Street Journal question, 47% said HMOs have "hurt" the practice of "making sure patients have enough time with their doctor." Only 13% believed HMOs had "helped," and 27% felt HMOs "had not made a difference."85 In addition, the NBC/Wall Street Journal poll found a majority or strong plurality saying HMOs had hurt other important elements of the doctor-patient relationship. These include "doctors controlling treatments – not insurance plan administrators" (54%); "Patients developing long-term relationships with a specific doctor" (54%); "Doctors informing patients about all medical options and treatments available" (47%); and "Making sure people have access to all medical treatment available" (45%). In not one of these cases did the percentage feeling HMOs have helped exceed 24%.86

In general, a growing majority appears to believe that managed care has made it more difficult for people to get the care they think they need. In a Kaiser/Harvard April 1999 poll, a solid majority (57%) said "HMOs and other managed care plans" had "made it harder for people to get care in general"; just 22% thought they had made it easier. This is up a bit from August 1998, when 53% felt it was harder for people to get care under managed care, while 29% believed it was easier.87

In focus groups, the central criticisms of managed care revolved around how the doctor-patient relationship has been fundamentally altered in an effort to reduce costs. Participants talked about the impact of this change on quality of care and on people’s trust in the health care system.

Some of the decisions that I hear … where people can’t get operations or their kids [who] have a serious illness and they need equipment, they need operations, they need therapy or whatever, then they have to wait until their HMO makes that decision whether their child gets that. They’re paying something every day out of their paycheck. It’s not fair. (Woman, Cleveland)

I don’t think HMOs are a good way to go because in many cases it’s not the doctor making the decisions, it’s the guy sitting in the office of the HMO that decides. (Man, Cleveland)

I want the best doctor for my kids, and I want to be able to pick the best doctor for my kid… I feel there’s not too high a price to pay for my children. (Woman, Richmond)

It’s a trust issue. Like I said, sometimes you get the relationship with the doctor and you have a little more trust in him when he’s recommending something. You don’t know these people in the HMOs. (Woman, Cleveland)

At what cost are they cutting costs? (Man, Richmond)


Perceived Failure of Managed Care to Reduce Costs

Perhaps most critical, not only does a majority believe managed care is hurting the quality of health care in the US, but a majority also no longer believes that managed care plans are actually saving them money. In July 2000, Harris found a majority (53%) believed managed care plans do not help to "contain health care costs." This percentage has been rising steadily since 1995, when only 31% felt this way and 59% were optimistic that managed care would contain costs.88

Other surveys have shown such a negative assessment as early as 1997. For example, Kaiser asked three times between 1997 and 1999 whether "HMOs and other managed care plans have helped keep health care costs down, or haven’t made much difference." In all cases, a majority believed they had not made much difference. Most recently, in April 1999, 55% gave this response, while only 21% felt managed care had kept costs down.89 This retrospective question probably elicits a more negative response than the more prospective Harris question because it better measures past experience than future expectations, and it offers the fuzzier alternative ("not much difference") as compared to a more definitive option ("has not helped"). Nevertheless, it does show a public clearly skeptical of the cost savings produced by managed care.

A slightly more positive outlook does emerge, however, when considering three-way questions from a June 1998 NBC/Wall Street Journal poll. That survey asked respondents to "compare how people are treated in HMOs and managed care plans and how people are treated in traditional health insurance plans" and asked them to say whether managed care has either helped, hurt or made no difference in costs. Still, in all cases, the percentage saying managed care helps cut costs is not a majority. This is true for "reducing individuals’ total health insurance premiums" (37% helped; 19% hurt; 22% not made a difference) and "Keeping the total US health care costs at a reasonable rate" (35% helped; 23% hurt; 28% not made a difference).90

The only dimension in which a larger number believed there had been savings than believed that there had been no savings was in "Keeping out-of-pocket health care expenses at a reasonable rate": 47% helped; 15% hurt; 20% not made a difference. This optimism may have eroded a bit, though. A year later in July 1999, a CBS News poll found the percentage saying HMOs have helped "keeping out-of-pocket expenses reasonable" was 43%, while 20% said HMOs hurt in this regard, and 20% said no difference.91


Health Care Industry Perceived as Profiteering and Inefficient

The combination of perceived erosion in health care quality and perceived failure of managed care to cut costs has led many Americans to view the health care industry as pocketing the gains from managed care’s limitations on health care services while failing to achieve greater efficiency.

As discussed above, a majority does not believe that managed health care has resulted in cost savings for the consumer. However, this is not their perception about savings for insurance companies. In a September 1997 Kaiser/Harvard survey, a strong majority of 72% felt HMOs and managed care plans help "insurance companies earn more profits." Also, 56% thought HMO use allows "employers to pay less for health insurance."92

There also seems to be a widespread view that the health care industry makes disproportionate profits. In the current COPA study, two-thirds of respondents (66%) said the "profits that are made in the health care industry" are "higher…than profits in most industries." Another 20% believed the profits were "about the same" as for other sectors, and a mere 7% thought profits were "lower" in the health care industry.

Many Americans perceive HMOs and managed care companies as being too heavily oriented to profits. In a Kaiser/Harvard study from September 1997 -- when attitudes were less negative than today – a 54% majority said that they thought of HMOs "more as a business looking out for its bottom line" than "as an organization whose main purpose is to serve people like [them]" (23%). When a January 1998 Kaiser survey offered respondents a middle choice, the response was a bit more moderate, but still a plurality of 38% said managed care plans were "not concerned enough about the quality of care." Twenty-three percent said the plans were "not concerned enough about the bottom line," and 29% believed they "balance these two concerns about right."93 (Some of those saying that managed care plans were not concerned enough about the bottom line may have been expressing the feeling that managed care plans are not efficient in controlling costs—a point discussed below.)

Some Americans question whether it is even legitimate for managed care to be a for-profit industry. In a January 1998 Kaiser survey, a plurality (48%) agreed that "it's wrong for profit-making companies to own and operate...HMOs and managed care health plans." Forty-four percent thought it is not wrong.94

Data from the early 1990s show that perceptions of the health care industry as profiteering were not only related to the industry’s perceived failure to control costs while cutting the quality of care. In fact, it appears that the tendency to attribute rising costs to profiteering has been in place for some time and may have been even more pronounced in the early 1990s, when costs were rising more rapidly than today. In a March 1993 Yankelovich Partners survey, nearly nine out of ten (86%) felt "unnecessarily high profits made by doctors and hospitals" are "responsible for the rising cost of health care." Only 12% believed such profits were not responsible for rising costs. Likewise, a March 1993 Martila and Kiley survey found that 67% believed "the amount of greed and high profits in the health care system" is a "very important…factor…in causing higher health care costs." Another 20% said it was "somewhat important," and just 8% said it was "not very" or "not at all" important.95

In the focus groups, there was no shortage of complaints that the health care industry is too focused on profits.

It’s a business. They’re running a business to make a profit. That’s what they are for, the bottom line…Not your health necessarily…They’re looking at the end of the year, the bottom line, how much profit they’ve made. That really is all they care about. (Man, Cleveland)

I think there’s an element of greed there at all levels…and it seems here lately that hospitals are trying to run themselves not as place to heal the sick, but it’s big business, make a buck … The bottom line is, it’s all about money. (Man, Richmond)

In addition to being too heavily oriented to profits, many Americans also perceive that the health care industry is exceptionally inefficient – another basis for Americans to resist accepting limits until the health care industry gets its house in order. In the current COPA poll, a 46% plurality believed the health industry was worse at controlling costs than other industries, another 43% thought it was "about the same" as others and only 6% thought it was better.

Many Americans see this inefficiency in the health care industry as related to excessive concern with profits. In a March 1993 Yankelovich Partners survey, 73% said that "paying too much attention to making a profit" is "responsible for the waste and inefficiency in the country’s health care system" (not responsible, 24%).96

Earlier polls also show that perceived profiteering and inefficiency in the health care industry leads to a greater resistance to health care provision limits. A Gallup question from August 1992 asked respondents to choose which of two statements they "tend to agree with most." More than three in four (77%) chose the statement, "The cure to rising health care costs is not to put limits on what is available to average people, but to cut the waste, high profits, and fraud in medicine." Just 20% preferred the opposing statement, "Given the explosion in the cost of health care, sooner or later we are going to have to accept limits on what health care is available to the average person."

However, another poll shows that at the time most Americans did not attribute all of the problems in health care costs to profiteering. In March 1993, a Martilla and Kiley poll found just 35% thought that "if we were to get rid of greed and unfair profits in the system, we could bring health care costs under control without further steps." By contrast, a solid majority (61%) found the alternative statement closer to their own, "Costs will continue to rise unless we take other steps to change the system."97

Loss of Confidence in Managed Care

Given the pre-existing tendency to see the health care industry as excessively profit-seeking, along with the combination of the perceived erosion in the quality of health care associated with the growth of managed care and the perceived failure of managed care to effectively control costs, it is not surprising that there has been a loss of confidence in managed care.

A number of recent surveys show the public believes managed care plans cannot be trusted to do the right thing. A September 1999 Kaiser poll found just 29% of respondents "trust health insurance companies, including HMOs and other managed care plans to do what is best for patients or customers…almost all the time" (6%) or "most or the time" (23%). By contrast, 68% trust them "some of the time" (48%) or "almost none of the time" (20%). An April 1999 Harris poll asked, "If a...managed care company such as an HMO...had a serious safety problems with one of their products or services, do you think you would trust them to do the right thing or not?" Just 37% said they would trust such a company, while 58% would not. A Harris poll taken in May 1999 found that 46% said they "trust…managed health plans…a great deal" (6%) or "some" (40%), but 50% said they trust them "not much" (26%) or "not at all" (24%).98

A majority also believes managed care companies do not serve health care consumers well. In an April 2000 Harris poll, 56% said that "managed care companies…generally do a…bad job serving their customers." Only 29% felt the companies do a "good job." As recently as 1997, however, the majority was reversed: at that time, 51% said the companies do a "good job," while 38% felt they do a "bad job."99 Survey data from Kaiser/Harvard in summer 1998 also supports this view.100

Indeed, there is significant dissatisfaction with the way managed care companies treat consumers. A CNN/Time survey from July 1998 shows that 36% believed there is a "crisis in the way HMOs and other managed care providers treat their patients." A slim majority (51%) believed it is a "problem, not a crisis." Only 8% thought there was "not a health problem."101

An increasingly strong majority believes HMOs are not responsive to the public’s desires. Four times since 1996, Harris has asked whether respondents think "the trend towards more managed care…will make your health plan more responsive to you as their customer, or not?" In July 2000, 63% said the trend would not make them more responsive (23% said it would), up from 52% in March 1996 (42% said it would).102

The increasingly negative public attitude toward HMOs and managed care is consistent with the strong support for reform in this area. For example, a July 1999 Gallup poll reported that more than two-thirds believed "managed health care plans, such as HMOs" need to be "completely overhauled" (27%) or "need major changes" (41%). Only 27% believed they "need minor changes" (20%) or are "basically fine the way they are" (7%). In the CNN/Time poll noted above, a three-way question revealed that 38% thought "the way HMOs and other managed care providers treat patients they cover" needed a "great deal of reform." Another 46% favored "some reform." Just 8% thought "no reform" is needed.103

Support for More Government Regulation of Managed Care

Public disillusionment with managed care and the desire for reform leave a majority or a plurality favorably inclined to more government regulation of managed care. In an October 1999 Pew survey, nearly two-thirds (64%) believed the "federal government [should] create national standards to protect the rights of patients in HMOs." Only 30% felt "this [would] get the government too involved in health care."104

Several polls show a modest to strong majority in favor of more government regulation, even when told that this would raise the cost of health insurance. Most recently, in August 1999, a Washington Post/Kaiser/Harvard survey reported that 58% believed "additional government regulation of managed care plans is necessary to ensure that consumers are treated fairly and get the care they need." Just 31% favored the opposing argument that "regulation of managed care plans isn’t worth it because it would raise the cost of health insurance." In a similar question by the same group in August 1998, 65% felt "the government needs to protect consumers from being treated unfairly and not getting the care they should from HMOs and managed care plans." By contrast, only 28% thought "additional government regulation is a bad idea and would raise the cost of health insurance too much for everyone."105

A June 1998 NBC/Wall Street Journal poll tried to get at this issue two ways. First, when asked to choose between two statements, a slim majority of 51% chose: "Passing new regulations on HMOs is a good idea because consumers have been treated unfairly by health plans and have not received the quality medical care they deserve." Less than a third (32%) resonated to the argument that "Passing new regulations on HMOs is a bad idea because it would result in huge government bureaucracy and significantly raise the cost of health insurance for everyone." In a separate question, the survey couched it as a debate between two candidates running for Congress. In that context, a very strong 69% said they would vote for the candidate who supported "tougher regulations to protect consumers from unfair treatment from HMOs and other managed care plans." On the other hand, a mere 18% would support the one who said that "additional government regulation of the health care industry would increase the size of government and raise the cost of health insurance."106

According to a July 2000 Washington Post poll, a strong plurality (48%) now says there is "not enough government regulation" of "HMOs and managed care." This is up 13% from a June 1998 NBC/Wall Street Journal survey. In both polls, slightly less than 30% said there is "too much" regulation (2000, 27%; 1998, 29%), and in both cases, 20% said the amount of regulation is "about right."107

Patients’ Bill of Rights

The primary policy proposal to regulate HMOs and managed care plans is referred to as the "patients’ bill of rights." Recent polling shows very strong public support for such legislation in principle, even when it is suggested that this might result in higher health insurance costs. As the box below demonstrates, about 3 in 4 respondents favors a list of reforms that would "provide people with more information about their health plan, make it easier for people to see medical specialists, allow appeals to independent reviewers when someone is denied coverage for a particular medical treatment, and give people the right to sue their health plan."108Similar questions from 1998 by Penn & Schoen, the Pew Research Center and the Los Angeles Times also show strong majority support for such legislation.109

Even when questions included strongly worded opposing arguments, as well as supportive arguments, a majority still supported a patients’ bill of rights. For example, a July 1998 NBC News/Wall Street Journal poll found 69% would support the legislation, even when given the argument that "it would increase the size of the federal bureaucracy and raise the cost of health insurance, which would result in some people being unable to afford coverage." Just 21% were opposed.110An American Viewpoint survey from January 1998 offered the following opposing argument: "Restrictions on HMOs are unwarranted government intrusion into health care and that this is just another attempt by the President to accomplish the government-run health care system he proposed in 1993…his proposal would destroy managed care which provides high-quality health care and keeps health costs low." Fifty-three percent supported restrictions, and 36% were opposed.111 Even when presented with an implausible challenge, a plurality still supports the patients’ bill of rights. In the July 2000 Washington Post/Kaiser/Harvard poll, the 81% who supported the idea were asked if they "would still favor this if it meant that some companies might stop offering health plans to their workers because the companies are afraid they might be sued along with the health plan." In that case, 49% still favored the idea, with 44% opposed.112

A majority of the public is willing to accept at least some additional cost to secure consumer protections against managed care companies. Kaiser/Harvard followed up its basic question on a patients’ bill of rights (see box above) with questions designed to gauge the public’s willingness to pay for the increased costs that may result. In an April 1998 poll, 59% of the total sample said they would still support the law if they "heard that it would increase the cost of health insurance premiums for a typical family by about 35 dollars a year."113 In December 1999, 52% said they would support it even if it "would increase the cost of health insurance premiums usually shared by employers and workers by about…200 dollars per year." This represents a marked increase in support from August 1998, when just 31% continued to favor the legislation in response to the same potential cost.114 At a $1,000 cost increase, however, support has never risen above 30%.115

Two Penn & Schoen questions from April 1998 also found strong support in the face of costs. An overwhelming 78% said they would support the bill even at a cost of "between $1 to $4 a month," or up to $48 per year, and 63% would support it at a cost of "between $5 and $10 a month," or up to $120 per year.116

One of the most controversial elements of the patients’ bill of rights is the proposal to allow patients to sue HMOs for negligence or malpractice if they are denied necessary medical care. Currently, managed care companies are protected from such lawsuits, even though a majority of Americans believes they are not.117 A June 1998 NBC/Wall Street Journal survey reported that an overwhelming majority (75%) believed that "HMO rules that restrict the patient's right to sue for damages if improperly denied care" is a serious problem.118 In questions asked by several different organizations between December 1997 and September 1999, between 57% and 81% have supported the right to sue HMOs or managed care plans.119 And even though a strong majority believes health insurance costs would increase if patients had the right to sue (75% in a September 1999 Harris poll)120, a solid majority still supports the right to sue when reminded of the potential costs. The most recent such question, asked in a CNN/Time poll in July 1999, found that 61% wanted to allow patients to sue "to protect consumers," even if this measure "would raise health care costs and increase the government bureaucracy."121

Findings Continued >>

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