Second Thoughts about HMOs for Medicare Patients

The Reagan administration's efforts to create a competitive alternative to Medicare's traditional way of financing medical care have yielded several important, though not altogether painless, lessons for its sponsor, the Health Care Financing Administration (HCFA). The agency has learned that elderly people will enroll voluntarily in alternative health care systems in substantial numbers and that an increasing number of physicians are prepared to treat them on a prepaid, fixed-cost basis as well. But the HCFA has also learned that contractual arrangements with alternative health plans must be monitored closely, not treated in the more laissez faire manner favored by the . . .