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Study: HMOs take money from patient care

November 25, 2003

SAN FRANCISCO, Nov. 24 (UPI) -- New research indicates the nation's six largest HMOs increase their earnings and profitability by dramatically cutting the amount they spend on medical care.
The study, released Monday by the Foundation for Taxpayer and Consumer Rights, indicates as a result, patients spent more for less coverage.

The FTCR said during the first half of 2003, the nation's six largest HMOs increased their earnings by $3 billion over 2002 levels and nearly doubled their 2001 earnings.

But Jerry Flanagan, a foundation consumer advocate, said the six HMOs -- Anthem, WellPoint, PacifiCare, Health Net, United Healthcare and Aetna -- on average have reduced the amount of money spent on medical care by more than 4 percent since 2001.

He said Aetna reduced medical spending most dramatically -- by 15 percent since 2001, which when adjusted for inflation, represents a 23 percent decline.

Said Flanagan: "The nation's largest HMOs are bleeding the health care system dry to pay for increasing profits, overhead and advertising costs. ... This new data underscores the absurdity of President Bush's claims that privatizing Medicare will result in more affordable health coverage for seniors."

The study appears in this month's edition of Healthcare Leadership & Management Report.