HEALTH MAINTENANCE ORGANIZATIONS: AN ANALYSIS OF THEIR EVOLUTION, DEVELOPMENTAL OBSTACLES, AND FUTURE ROLE IN THE HEALTH CARE DELIVERY SYSTEM (COST)

GEOFFREY JOHN SUSZKOWSKI, Pace University

Abstract

Health care is what economists call a "superior good," one that claims an increasing part of the consumer's dollar as his or her income rises. Economic growth, therefore, will tend to boost the share of national income devoted to health care. According to actuarial projections, the cost of hospital insurance under Medicare, 2.97 percent of the social security wage base in 1982, will more than double by 2005 to 6.29 percent, and nearly quadruple by 2035, to over 11 percent. It is obvious that hospitals will come under increasing cost pressures as our population base ages and the remaining work force begins paying more for the medical care of this aging population. If United States citizens could be confident that the expected incremental benefit of all medical care they buy exceeds the incremental cost of those services, the growth in medical expenditures, like similar past increases in spending on automobiles, televisions and computers, would be a measure of the superior capacity of new commodities to satisfy consumer wants. But, the system of third party reimbursement precludes such rosey interpretations. Because care is essentially free when demanded, incentives encourage the provision of all care that produces positive benefits whatever the costs. Because of this continuing unacceptable growth in health care expenditures, the government, business, unions and, to some extent, the general public, have voiced an opinion that HMO's may be an alternative form of health care delivery that provides an acceptable level of medical care at a much reduced cost. The problem in the United States, as well as in all developed nations, is how to alter the behavior of providers of health care and patients so that expenditures are curtailed on care that, in some sense, is worth less than it costs and yet, not destroy the moral fabric of society. To many, HMO's appear to offer a vehicle whereby expenditures can be curtailed while a reasonable level of care can be maintained. The impact HMO's have made on the health care delivery system cannot be measured in absolute numbers of HMO's in operation today. The real impact HMO's have made is to change the way health care providers, insurers and the public, view the health care delivery system and evaluate alternate forms of care delivery.

Subject Area

Health care

Recommended Citation

SUSZKOWSKI, GEOFFREY JOHN, "HEALTH MAINTENANCE ORGANIZATIONS: AN ANALYSIS OF THEIR EVOLUTION, DEVELOPMENTAL OBSTACLES, AND FUTURE ROLE IN THE HEALTH CARE DELIVERY SYSTEM (COST)" (1985). ETD Collection for Pace University. AAI8607373.
https://digitalcommons.pace.edu/dissertations/AAI8607373

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