Time for a "Do Over".

The "do over" is a tradition of American childhood. Simply by declaring "Do over!" children can demand a second chance in which the mistakes they made playing a few moments ago are not counted. At the end of the 1990s, some policymakers are trying to declare "Do over!" for the past 10 years of healthcare policy.

The "do over" theme seemed to permeate the 1999 meeting of the American Public Health Association (APHA), held in Chicago in early November, especially in discussions of managed care and its application to long-term care.

One of the most spectacular calls for a "do over" occurred in former Senator Bill Bradley's keynote address to the meeting. Bradley argued that the piecemeal attempts at healthcare "reform" since 1994 have contributed to confusion and have hurt both patients and providers. In his words, "The lesson [the Clinton administration] learned from the 1994 healthcare defeat was that big things can't get done in Washington, so let's look at small, symbolic things. But that was the wrong lesson. Indeed, big rhetoric followed by small actions contributes to disillusionment." He was particularly critical of recent changes to Medicaid--including the drive toward cost containment in the name of managed care--which have done nothing to improve access to long-term care. Bradley's proposed solution: Replace Medicaid and other healthcare programs for the poor with subsidies for health insurance purchases and focus remaining public-sector healthcare dollars on access to long-term care.

Research presented at sessions during the meeting tended to support Bradley's thesis. For example, a team from Georgetown University found that 2 million of the 11 million Americans requiring some form of long-term care cannot obtain services. A disproportionate number of Americans with unmet needs for long-term care were found to be women under 65 years old, with severe disability and very limited economic means. The Georgetown group found that the lack of services directly affected the ability of hundreds of thousands of disabled people to eat and bathe regularly, or to maintain necessary special diets. Drs. Elizabeth Bradley and Sarah McGraw, reporting on a study conducted with colleagues from the Institute for Long-Term Care Policy for the State of Connecticut, found that the use of specific types of long-term care services continues to be affected by ethnicity. Despite changes in financing mechanisms, minority elderly in Connecticut are more likely than whites to be served by home healthcare and less li kely to obtain access to residential care in some counties. The reasons were unclear.

Home care itself, however, is under a squeeze. RJ Schmitz of Abt Associates, a private-sector research firm frequently contracted by HCFA, presented an economic model of the home health industry under the new Medicare Prospective Payment System (which uses managed-care-type reimbursement). Schmitz found that the system will influence the likelihood of small providers to merge into large companies and that the resulting changes in competition will affect quality of care. In particular, home healthcare agencies might be driven to reduce the frequency and duration of home health visits and try to reduce financial uncertainty by selective admission of new patients.

One of the most damning indictments of recent cost-containment "reforms" was provided by Dr. Richard Fortinsky of the University of Connecticut Center on Aging. Looking at patterns of care under managed care and other systems of payment, Fortinsky found that managed care significantly changed the service mix for patients with Alzheimer's disease and other forms of dementia. Patients under managed care received fewer in-home support and nonmedical services in comparison to other patients, and yet, overall Medicare expenditures per client did not change significantly over time. The "savings" achieved in support services were lost in increased costs for longer and more frequent hospitalizations. In effect, it appears that managed care's efforts to override caregivers' recommendations in the name of cost containment often result in patients deteriorating more rapidly and requiring more access to intensive care.

This was not the way that managed care was designed to operate. Originally, the purpose of managed care was to foster a full continuum of services, prevention-oriented and with financing organized rationally. Although traditional HMOs operated on the principle that spending money on nonclinical services and early intervention would save money on intensive treatment, saving money was not the objective of such pioneering providers as Kaiser Permanente. Rather, the goal of managed care was a better quality of life for the patient and more certainty for the provider. When government turned to managed care to justify lower budgets for health services, though, it transformed a system of care into a system of care denial, and one that has served no one very well.

The managed care industry itself is aware of these issues. Managed care companies that initially dove into the Medicare and Medicaid markets expecting quick profits are fast retreating. In Ohio, for example, only one of the seven companies that originally offered managed care for urban Medicaid is still interested. On the private-sector side, the APHA meeting witnessed the dramatic announcement by United Healthcare, one of the larger managed care networks, that it will no longer review most care decisions of its physicians. These are not altruistic decisions. Instead, they reflect the reality that cost shaving through service denial will eventually produce higher per-patient expenses.

The demand for change in our system of financing healthcare is not as loud and universal as it was during the early 1990s. At the beginning of the decade, employers were extremely unhappy with skyrocketing health benefit price tags. Managed-care-type cost containment has succeeded in limiting cost increases to employers, but only by shifting responsibility for payments to the individual patient and to the public sector. Where employers are not the major payers, as in care for the elderly, cost containment and managed care appear to create higher costs and less patient satisfaction. As we enter the presidential election season, it will be interesting to see whether candidates are more responsive to the demands of employers for the cost-containment status quo or to the demands of patients and providers--loudest of all in long-term care--for a "do over."