Contract Killer

Michael W. Lynch from the February 1999 issue

Even the most skilled managed-care bashers in the Clinton administration must have felt a little queasy last October. That's when 96 HMOs announced that they would no longer do business with the federal government.

For months, HMO representatives had been telling the Health Care Financing Administration, which administers Medicare, that without reimbursement increases and relief from new regulations, they would be forced to pull out of some markets. While the HCFA sets non-negotiable pay rates for participating plans, it can't force insurers to renew Medicare contracts.

"We told them, `No deal,'" bragged President Clinton at an October 8 press conference. "We're not going to allow Medicare to be held hostage to unreasonable demands." The upshot for the 50,000 seniors now living in areas bereft of a single managed-care provider? They can enroll in Medicare's traditional plan, for which seniors will pay the same premium as before in return for fewer services. How's that for reasonable?