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The New York Times recently published an article entitled “10 Steps to Better Health Care,” which basically describes Health Maintenance Organizations (HMOs) where doctors get paid a salary and often receive a bonus related to the quality of healthcare they deliver and the cost of that healthcare. HMOs typically have significant restrictions on seeing physicians outside the network and seeing specialists without a referral. These restrictions allow the physician to control the overall cost of healthcare.

It is therefore not surprising that none of the cities where we found low healthcare costs were in large metropolitan areas where there are high amounts of specialists and a low penetration of small HMO physician networks. The authors raise a great point: these are extremely efficient healthcare delivery models. The only problem is Americans hate HMOs! But somehow we need to figure out what will govern the runaway costs of medical care, and I would rather have my physician say no to a service than no to a bureaucrat.

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