In social HMOs, a model for healthcare reform

As Washington grapples with ways to ward off the eventual insolvency of Medicare, a feisty but fragile Josephine Castoria is living proof that effective healthcare can be provided without breaking the bank.

The octogenarian has had a series of health problems that could easily land her in a nursing home, costing a minimum of $30,000 a year.

Instead, she lives comfortably in the brick apartment house in Brooklyn where she has resided for the past 27 years with her disabled son - at no more cost to taxpayers than the average Medicare recipient, about $5,000 a year.

But she has full prescription drug benefits and the confidence that all her needs will be taken care of - from shopping to getting to the doctor. Someone will even come in to help her change a light bulb or repair a leaky faucet. "I would never want to go into a nursing home," she says. "I'd rather try to do things myself."

Believe it or not, Mrs. Castoria is on Medicare - and the extra services she receives, in the long run, actually end up saving the government money.

She's a member of an experimental project called Elderplan, which pays for her home care as well as her healthcare. It is one of four so-called "social HMOs" in the country.

Though they've been around for a number of years, the social HMOs have quietly produced a record of achievement that many health-policy analysts now believe provides the best model for overall reform of the nation's ailing healthcare system for the elderly.

And with the baby-boom generation just around the corner from 65, and ready to dip into Medicare funds, health-care experts say it's all the more urgent to integrate such innovations into the larger Medicare program.

"I believe this is the approach that healthcare and managed care should be taking," says Walter Leutz, a health-policy analyst at Brandeis University, who's studied social HMOs. "They need to extend themselves to include these kinds of community support services."

What's different about social HMOs

The goal is to keep people healthy and living independently longer. Traditional HMOs try to do that on the medical side. But since 1997, when Congress encouraged managed-care organizations to take Medicare patients, many have cut services or stopped taking them altogether - citing financial concerns.

The nation's four social HMOs, on the other hand, are in the black or breaking even. They're also expanding. One difference is that the social services they provide make it easier for the elderly to continue living at home. A small thing, like having someone come in to change a light bulb, can prevent injuries to seniors.

The other difference is the payment schedule. Medicare provides social HMOs a slightly higher fee for frail elderly subscribers, but less for healthy ones. The result is that they have more financial flexibility.

"It's much cheaper to provide the necessary supports to keep a chronically ill and disabled senior in the community, regardless of his or her medical condition," says Eli Feldman, Elderplan's president and CEO.

He likes to joke that his social HMO is the best-kept secret in New York. Though it's been around since 1984, the program has been available to only about 6,000 seniors in Brooklyn because of its status as a demonstration project. But now, thanks to another waiver from Medicare and an act of Congress, Elderplan is preparing to expand to other boroughs. It will more than double in size this year. Eventually, officials hope to serve as many as 36,000 seniors in the city.

Critics of the program worry the success that social HMOs have had with small numbers may not be replicated if they grow too large. They're also concerned that if regular Medicare began offering more home-care services, like the social HMOs do, elderly people would "come out of the woodwork" looking for help, and that would break the Medicare bank.

But across the country in Long Beach, Calif., the nation's first and largest social HMO appears to belie those concerns. Called the Senior Care Action Network (SCAN), it has 44,000 subscribers and garners favorable reviews from Consumer Reports as well as its own subscribers. In surveys, 96 percent say they'd never leave the plan, and 98 percent say they'd recommend it to a friend.

Studies have also shown that instead of racing to get the extra services, many seniors are reluctant to accept extra help. "People will struggle to do things on their own or get a family member to help," says Dr. Leutz. "It's only really in the extreme cases that they accept they need an outsider to come in."

The financial side is just as surprising. About 20 percent of SCAN's subscribers meet all state criteria for nursing-home admission. Yet more than 95 percent, like Castoria in Brooklyn, are able to live at home. Advocates say that can save taxpayers millions of dollars.

They point out that the Census Bureau estimates that 55 percent of all seniors who end up in a nursing home spend down all of their money within a year, and then become dependent on Medicaid. The average cost of nursing-home care is about $30,000. Multiply that by the thousands of seniors social HMOs help to stay independent, and proponents say the savings are big.

Josephine's drop-in friends

And that doesn't touch on the human side. Here in Brooklyn, for instance, Castoria's eyes sparkle as Noah and Herta Plotkin drop by to help her with groceries and other odds and ends.

They are Elderplan volunteers - members who get "time dollar credits" for every hour they help another member. They can use those to buy health-related items, like neck and back cushions. Or they can save them up and cash them in when they need help themselves.

But the service also provides another intangible benefit - friendship. The Plotkins have been helping Castoria for six years now, and they've become close friends.

"So far it's working out very well for us," says Mr. Plotkin. "I think it would be a good idea to expand it."

(c) Copyright 2001. The Christian Science Monitor