HMOs Clash With Medicare Plan

Most elderly Americans on Medicare who have joined health maintenance organizations - or HMO's - face increased premium charges and decreased benefits in the next year because the companies claim their payments from the government are too low. CBS News Correspondent Eric Engberg reports.

The companies, seeking congressional action to increase their fees, say another 250,000 people will be forced entirely out of their HMOs, which will simply stop doing business in unprofitable counties.

That continues a trend that began last year, when HMO's dropped 400,000 customers.

"Health plans are trying to stay in this program," says Susan Pisano of the American Association of Health Plans. "They want to stay in this program, and where you see them exiting this program, they're being forced out because they can't cover the costs."

For many of those who still have a health plan, the charges will go up.

A survey by the HMO trade association found that one million Medicare recipients -- who generally pay about $43.50 a month in premiums -- will find their bills raised by $20 a month or more.

Just last Tuesday, President Clinton proposed extending benefits to seniors who don't join HMOs to cover prescription drugs. Supporters of his plan say the latest news will put new pressure on Congress to act, because of the bad impact on the elderly.

"They're anxious, they're scared, they're cutting pills in half, they are not getting prescriptions filled because they can't afford it," says Joe Baker of the Medicare Rights Center. "This is taking a toll on the nation's seniors."

Health officials stressed that anyone dropped by an HMO may be able to find a new one, and if not, will be able to sign up for the standard fee-for-service Medicare program.

Reported By Eric Engberg