Instead of relying on mergers and price-hikes, HMOs should test new ways to work with their physicians to spend finite dollars better. Second, state government must identify the hospitals, beds, and emergency rooms required to protect the public's health now, and as baby boomers age. It must also identify hospitals facing financial distress. Third, the state should create a new security fund, financed by a 0.25 percent assessment on all hospitals' revenue, that would offer emergency aid to distressed but needed hospitals. The state should also help endangered hospitals with debt refinancing, and seek receivership authority to stabilize failing but vital hospitals.
Drug makers can afford it.
Even after financing research, their profit margins are the highest in the US, 39.4 percent of equity in 1998. Sixth, the role of government and the role of competition in health care should be reversed. It is futile to continue to use market competition to contain cost, and government to protect quality. Instead, let government contain cost and let HMOs, doctors, and hospitals compete by quality and compassion. Relying on either competition or government alone is reckless.