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I. INTRODUCTION
The backlash against managed care, in general, and Health Maintenance Organizations ("HMOs"), in particular, is a major health policy issue.1 It has led to the formation of major commissions at the national and state levels, and to a great
outpouring of legislative activity.2 The U.S. Congress has been deadlocked over various versions of a Patients' Bill of Rights for the past two years.3 As a nation, we are far from resolving the many problems consumers report experiencing with their HMOs. However, to prescribe an effective solution to the problem, it is important to understand the root causes of the consumer backlash. It is, after all, possible that a Patients' Bill of Rights will do little if it is not targeted to correct what is really bothering people about HMOs.
The introduction of HMOs was an attempt to correct some of the major shortcomings that consumers and purchasers experienced under the traditional feefor-service indemnity ("FFS-I") system.4 These problems included expenditures that were growing at an unacceptable rate, wide variations in medical practice not associated with differences in patient outcomes or medical need, and large amounts of inappropriate surgery and hospital admissions.5 Under these circumstances, any serious policy that attempted to limit expenditures would need to create standards of appropriateness, to examine and curtail inappropriate use of services, and therefore limit the autonomy and authority of health professionals by subjecting their decisions to review and approval. Thus, any policy that tried to reduce and control health care expenditures to a significant degree would likely have caused a backlash among those physicians who would be asked to change the way they practice medicine and to be conscious of the costs of caring for their patients. One important cause of the backlash is doubtless the anger and frustration of many physicians who have seen their autonomy and authority for making patient care decisions threatened, if not substantially diminished.6 Returning decision-making authority for patient care back to physicians may be an important part of the solution to the backlash.7
However, until the late 1980s, HMOs served millions of Americans without a consumer backlash. By January 1990, there were 33 million Americans in HMOs and still no apparent backlash. For example, the California Public Employees Retirement System ("CalPERS") manages...