Any possibility of an S&L–type debacle occurring in the health industry?

Abstract

The geographically linked health networks with their integrated health maintenance organizations (HMOs), now gaining such awesome market penetration and fiscal power, and the projected cutbacks in Medicare and Medicaid reimbursement could conceivably set the stage for similar underlying conditions that led in the late 1980s to the savings and loan (S & L) debacle. Some would argue that to promise health services to the indigent and the working poor and their dependents is bestowing an entitlement to low-income families that is analogous to the taxpayers previously providing fiscal relief to upper-income savers with the S & L bailout. Although parallels are drawn throughout this article between our current procompetitive health industry and the thrifts before the S & L crisis, it is concluded that it is unlikely a comparable societal and fiscal disaster will occur soon in the health field. What is more predictable is that the creditworthiness of some highly leveraged networks with poor-payer-classification patients will become so precarious that the federal government will initiate and administer a highly politicized "health care delivery relief fund" to bail out failed alliances and HMO plans.