Playing The HMO Game

Who would have guessed that a little baby-blue tablet designed to restore potency to the impotent would pack such a wallop? In June, Kaiser Permanente, the giant HMO with the imperial name, announced that it had decided not to cover the cost of the $10 erection pill for its 9 million members. Just three weeks later, the little pill had become a symbol of one of the nation's hottest political issues: what HMOs do and don't pay for. Viagra's role in the debate was heightened last week when the federal agency that administers Medicaid told the states that they were required to cover Viagra for the indigent and infirm "when medical necessity dictates," and some of the states--much like tightfisted HMOs--dug in their heels and refused to pay.

What happened? When did tumescence become a medical necessity, and how did health reform rise from its long slumber to become an issue of burning national interest? Perhaps Viagra was just a media catalyst, the populist hook that finally put managed care back on the front page. Or perhaps the politicians in Washington, searching desperately for emotional issues at a time of peace and prosperity, finally found a point of irritation to which they can apply some soothing legislative balm.

Whatever the reason, Washington is scrambling to embrace the surge of interest in caps and coverage and out-of-pocket expenses. Members of Congress back home for the Fourth of July weekend spent much of the holiday making speeches about patients' rights and access to emergency care. President Clinton, flying in from a restorative sojourn in the Middle Kingdom, let it be known that he would hit the ground running on health care this week. Meanwhile, an ever vigilant army of lobbyists is already gathering in the capital for what could be the biggest political fight between now and the fall elections (see following story).

While Viagra provided a spark, the embers of discontent have been smoldering for some time. Back in 1993, when Hillary Clinton proposed her grandiose plan for curbing rising health-care costs and covering the uninsured, the American people made it clear that they didn't want the Clintons or anyone else in government telling them which doctors they could choose or what pills they could take. What most folks didn't realize was that if government didn't do it, somebody else would. That somebody turned out to be America's employers, working hand-in-glove with the insurance companies. Today 85% of all insured employees--up from 53% five years ago--have moved out of traditional fee-for-service plans, in which doctors call the shots and insurance companies pay the bills, and into managed-care plans, including health-maintenance organizations, or HMOs. Almost every aspect of medical care provided by HMOs is second guessed--not by the government, not by Hillary, not even by doctors, but by the bean counters.