By now, it''s an old story with well-established roles. Health insurance providers hike premiums, while the choice of doctors and services shrink. Physicians bemoan their inability to practice medicine, and hospitals clamor for ways to stay afloat while their bottom line disappears. In the boardroom, employers plot new strategies for offering basic benefits to workers without compromising profit margins.

In the middle of the health care tangle cower the ratepayers-you and I-wholly dependent on whatever bone is tossed our way, powerless over the delivery of our own health care.

It is, by all appearances, a sorry state of affairs.

Or is it?

After a decade of managed health care, where costs are strictly controlled and services are streamlined, statistics from numerous sectors seem to indicate that the humungous health-care debacle is actually improving, both financially and in practice.

"Right now the sexy story is the real and perceived problems with managed care. What has been forgotten is a few years ago, health care costs were raging out of control," says Doug Hitchcock, government relations council with the Hospital Council of Northern and Southern California.

"You have a powerful campaigning of the media bought off on the fact that HMOs are evil entities only out to screw old ladies and babies," says Deborah Howard, a consultant with Taxpayers Against Higher Health Care Costs.

If the mission of managed care, which got its start here in California more than 30 years ago, was to control costs, it seems to be working. A recent study by the Health Care Financing Administration in Washington, DC, showed that in 1996, national health care spending had the slowest rate of growth of any other year since tracking began in 1960. The 4.4 percent increase, for a total of more than $1 billion, came down from the average increase of 5.5 percent in recent years. While a billion dollars is still an enormous amount of money, and by far the greatest amount spent on health care of any other nation, analysts point to the success of managed care for the slow down.

"Managed care has saved a very significant amount of money," says Hitchcock, "this is inarguable. Sometimes this creates a tough case for providers. There are times when health care providers (doctors, hospitals) feel it''s working too well. But the savings translate very directly to who has to pay the premiums. [Patients] are paying less than they would be paying if health care costs had continued to rise they way they were before."

Even in Monterey County, where managed care has had less impact thus far than in urban areas, some admit that changes in the delivery of health care forced by impending changes aren''t all bad.

"Managed care, the scientific management of organizations, and applying those principals to health care is really revolutionary," says John Fletcher, chief financial officer at Salinas Valley Memorial Hospital (SVM).

Fletcher says that the streamlining of services managed care prompted has led to some innovative and beneficial services for patients. SVM''s heart center, for example, has developed a "clinical pathway" in which patients are treated through a new approach aimed at getting them through the system as quickly as possible, "but not before they are ready," Fletcher says. "There is resistance to this, some physicians call it ''cookbook medicine,''" he says. "But it''s not. It''s just a systematic approach to the disease process. Before there was a very relaxed approach, where there was no restraint on time, money or resources."

It''s impossible to calculate how much a doctor''s visit or an appendectomy would have cost if managed care had not sought to slow down rising medical expenses. But one thing is for certain, with ever-expanding technology created to keep us alive longer, and with a population of "baby boomers" inching its way toward retirement years, health care costs were moving perilously close to stratospheric.

Good News or Bad?

But while the numbers herald good news, most Americans would be hard-pressed to wave the welcome banner to a health care system they feel has been forced upon them, with sometimes tragic results.

The fact is, when it comes to health care, many can''t see beyond the ballooning premiums they are paying to insurance companies, while feeling they are getting less for that money. Top this with frustration about limited access to doctors, and stories of multi-million dollar salaries going straight into the pockets of HMO officers, and you''ve got a rightly pissed-off public.

Derry Scott, a local hotel worker, laments what he sees as the increasingly impersonal nature of health care. After moving to the Peninsula three years ago, he signed up with a physician who came highly recommended, and worked under his company''s health plan. When Scott changed jobs almost two years ago, he enrolled under his new employer''s plan which did not use his doctor. While his current plan, Blue Cross'' Prudent Buyer, holds contracts with numerous local physicians, Scott says he is angry that he can''t see the physician he had come to trust. "Health care is a very personal thing, or at least it used to be," he says. "You''ve got to earn my trust before you check me for colon cancer."

Leo Keech, an operations manager for a small company based in Seaside, found out just how little power patients wield in the face of health insurance companies after a bicycle accident three years ago left him with a broken arm and leg, and a blood clot in his brain. "I went to CHOMP (Community Hospital of the Monterey Peninsula) in the middle of the night, and the only brain surgeon who was there was not on the plan. There was no other place for me to go," he remembers.

While the neurosurgery went off without a hitch, the battle with the insurance company to pay the 80 percent coverage it had promised has been almost as painful as the injuries, Keech says. Three years later, he is still paying off a $4,000 debt incurred from the accident, including $1,000 that he claims the provider was supposed to cover.

"I think its basically a sham and the people getting wealthy, the doctors and the insurance companies, and the same thing for the employers, they are cutting their benefits as much as they can," Keech fumes. "At one time it wasn''t so odd that you had full coverage when you went to a job and you really didn''t have to worry about anything. Now you are paying a good chunk of your insurance, for what?"

We All Benefit

What you are paying for, insurers argue, is the ever-increasing cost of medical technology, an aging population, and the increased risk that we all take on when more and more people are brought under the health care umbrella. "All the consumer sees is prices going up, with HMOs they say ''I can''t see the doctor I want'' or with PPOs they are paying more," says a Monterey insurance broker, who asked not to be identified. There are many factors affecting the cost of health care, including legislative regulations, largely unknown by the general public, he says.

"Look, we didn''t want a national health plan, so now we have corporate America dictating the rules. Realize this is the most important issue of this generation. But the fact is, there is more access to health care for more people than ever before."

In fact, recent changes in the health care industry have resulted in benefits to consumers never before possible with the traditional fee-for-service plans of the past. A slew of new legislation, both federal and state, has ensured that those previously exempt from the benefits of full health coverage are now protected with equal access to medical care.

"The problem comes because health care is expensive and we want someone else to pay for it," says Howard. "[The question is] are we going to provide more and better health care for fewer people, or basic health care to everyone?"

National health care-something the Clinton administration failed to muster enthusiasm for back in 1993- aims to provide basic health care for the masses. Over the last few years, attempts to bring the best of national health care-access for all-have found their way into law. California, with the highest penetration of HMOs in the country, some 39 percent of the insured market, remains a leader in the health care movement with innovative programs that are light years ahead of national standards. Many of these programs are now mandated, meaning that all insurance companies licensed in state are required to offer them, and we to pay for them.

The federal Health Insurance Portability and Accountability Act (HIPAA), also known as the Kassebaum-Kennedy bill of 1996, and Cal-COBRA (a new California version of the Consolidated Omnibus Budget Reconciliation Act of 1985), guarantees that those leaving a job with a medical condition and those companies with less than 20 employees will have health care coverage, respectfully.

The Health Insurance Plan of California (HPIC) was created in 1992 as the nation''s first statewide small business health insurance purchasing pool, and now serves more than 7,000 businesses. The Major Risk Medical Insurance Program (MRMIP) provides coverage for persons unable to obtain private health insurance due to pre-existing medical conditions.

The Access for Infants and Mothers (AIM) program, started in 1991, has taken huge steps toward getting low-income, pregnant women (who aren''t eligible for MediCal) into prenatal care, as well as providing up to two years postpartum and infant care.

And in October, 1997, Gov. Pete Wilson signed into law four bills that make up the much touted Healthy Families Plan, enabling low-income families who don''t qualify for MediCal to purchase health insurance for their children either through a group pool or through financial assistance to pay for employer-based dependent coverage.

"People talk about universal health care, well we already have universal health care through the government," notes Peninsula writer Chris Brewinton. "I don''t see anyone dying in the street because they have cancer, or some life-threatening disease and they can''t get help because they don''t have the money."

"A lot of the changes are very positive," says the anonymous broker. "All the consumer sees is prices going up, and with HMOs say ''I can''t see the doctor I want.'' But the mandated benefits like Cal-COBRA and the new HIPAA guarantee rules, they are really positive for the consumer."

Despite the popular perception that managed care has negatively changed the delivery of health care, statistics also show that more often than not, Californians believe they are adequately covered. A statewide poll conducted this summer by the governor''s task force on managed care found that three-quarters of insured Californians, more than 70 percent of the state''s population, were satisfied with their health care.

That doesn''t, however, negate the fact that in this new health care system there are a lot of kinks still to be worked out. Indeed, much of the recent legislation targeting insurance companies was spurred on by the public''s distrust of the "big business" of modern health care-a system that requires them to accept rules about their own care dictated by someone else, and not their doctor.

Better Care?

Even more than consumers, health care providers have come out as the most vocal opponents to managed care, and HMOs in particular, as imposing roadblocks to the delivery of good medicine.

"If the control of the cost becomes more important than the delivery of quality medical care, that would be the greatest tragedy that managed care could accomplish," says Dr. James Mattison, a general surgeon who also heads the legislative committee of the Monterey Medical Society, an affiliate of the California Medical Association.

And legitimately or not, much of the lauded financial successes of managed care comes at the expense of doctors and hospitals-with potentially conflicting effects, medical professionals warn.

Mattison gives the example of a California lawsuit being fought over a missed diagnosis of breast cancer that could have been detected had the proper tests been run earlier. In this case, a young woman with a lump on her breast went to her primary care physician, but did not receive a mammography or biopsy. These costly procedures are usually only paid for under managed care in older women, and the doctor thought he was saving his patient money. As the lump grew, and test were finally run, her cancer had spread beyond treatment. "This was a case of a physician not doing his patient a favor by putting off [expensive tests that an insurance company may not have covered]," Mattison says.

Some doctors acknowledge that they are now having to choose between patients in insurance plans that pay higher reimbursements, while refusing to see others.

On the flip side, doctors, especially primary care physicians who are seeing their reimbursements decrease, may sometimes pad their patient roster in order to keep their income stable. "They have to see more patients to realize a comparable income as two to three years ago," says Mattison. "If they simply increase their volume and reduce the care they give their patients, are they giving the same quality of care as before?"

Dr. Eric Del Piero, an ophthalmologist practicing in Salinas, says he finds it hard to believe that the rate of health care costs is slowing, when all he''s feeling is more financially pinched. "Last month, the insurance company I and my staff are covered under, said my premiums were going up because of the increased costs in health care. At the same time, I get another letter saying my reimbursement rates are going down because of the increased costs of health care."

Del Piero, who also serves as president of the local medical society, says he is making the same amount for a common retinal tear procedure as he did in 1985, "and that is with no increase for inflation, or cost of living increases," he says.

"I don''t know of any plumber, any businessman who would be happy getting the same salary in 1998 as last year, with all the cost of living increases and inflation," Del Piero says.

"Physicians are a very small group that shoulder a very big load."

Unfortunately for medical professionals, there seems to be little public sympathy for diminished doctors salaries at a time when everyone else is being asked to pay more for care.

"There''s tough times for doctors and hospitals ahead," predicts SMV''s Fletcher. "A hospital is a place you go when you are in pain, and you give up a number of your freedoms. Going to the doctor and the hospital is not a fun event. And there''s this perception that doctors have made very big incomes and hospitals have done very well. In a democracy, they are very big targets."

We Pay More

On the Central Coast there is indeed a perception that hospitals and doctors can get away with charging higher prices. "Hospitals here are not on the same discounting level as other places. CHOMP, Salinas Valley Memorial and Natividad are not up to the same level of competition," says David Barrett, executive director of the Monterey County Schools Insurance Group which bargains for health coverage for 4,000 public school employees. "The hospitals are a real concern for us. There are huge discounts going on outside our area."

When Blue Cross did a rate realignment last summer, Monterey County''s insurance rates went up a whopping 19 percent, while neighboring counties like Santa Cruz rates increased only 7 percent, and in Santa Clara County, rates actually decreased.

The reason? Blue Cross spokespeople say the huge fluctuation is directly related to higher costs of health care in an area where there is little provider competition, and therefore little incentive to reduce prices. Meanwhile in Santa Clara County, for example, an increase in provider services has raised competition, and thus decreased rates as hospitals and doctors vie for insurance contracts and patients.

Add to that equation the added risk factors decreed by legislative changes and new provisions like domestic partner coverage, and insurance rates continue to climb.

CHOMP CEO/President Jay Hudson denies that his hospital is charging more for services. "I would totally disagree with that," he says. Yet where hospitals elsewhere often offer discount to health insurance providers in bargaining for contracts, Hudson admits that CHOMP will not give discounts. "When you start to discount one over others, than you have to raise the rates with those others you don''t discount.

"The main concern we have is you start getting into quality, and we haven''t had to go that route yet," Hudson says.

Where managed care has had a definite effect is on the financial ledgers of doctors and hospitals, which find themselves in the position of having to accept what insurance companies are willing to pay.

"The hospital''s bottom line has disappeared," says SMV''s Fletcher. "The payers-HMOs-are at the top of the food chain. The providers are at the bottom. The patients," he adds, "are paying less for office visits. In most cases, they''re doing OK."

Salinas Valley Memorial, the county-owned Natividad Medical Center and CHOMP have all had to streamline their services, reduce overhead and bring their facilities in line for health care in the new millennium-care that focuses on ambulatory services and keeps patients out of the hospital. Natividad has built a new $95 million facility that will specialize in neonatal care and outpatient services like treatment programs. Meanwhile, SVM has partnered up with the Visiting Nurses Association and urgent care centers to decrease usage of its emergency facilities. This past year, CHOMP purchased the Monterey Peninsula Surgery Center and the Hospice of the Central Coast to provide patients with an integrated delivery system, "from birth to the end of life," according to Hudson. In addition to the Community Health Plan (CHP) the hospital founded a few years ago, CHOMP also plans to start a Medicare insurance program where it contracts directly with the government. This could eliminate the 20-30 percent revenue that goes to third party administration, Hudson says. Medicare currently accounts for 55 percent of revenue at the hospital, and Hudson expects that to grow in the next coming decades.

These changes, Hudson says, have ultimately been for the benefit of the patients. "You come in for a gallbladder [operation] and it''s much less invasive," Hudson says. "It used to take six days, now just one and a half. That''s good for the patient, and it also lowers costs."

More and Less

While individual health care premiums are increasing, there is an overall slowdown of how much health care is costing consumers each year: a difficult notion even for industry insiders to grasp. "Just when you think you have your hands around a corner, it spills out the other side," says the broker. What consumers do understand is seeing a larger chunk taken out of their paychecks each month.

For this reason, many are choosing to take their chances and forgo insurance all together. Others are buying into individual plans offering fewer options -and cheaper premiums-than their employers'' group plan. For someone like Keech, it costs less to purchase health insurance for a married couple than to pay both the co-pay rate for himself, and the separate coverage for his wife offered by his employer.

Ironically, while employees are the ones seeing their premiums climb, it''s the employers who kick-started the move to managed care, and who now have forced the cost of health care down.

Employers account for 32 percent of California''s $121.5 billion medical bill, followed closely by social service programs like Medicare and Medicaid, according to a report commissioned for Taxpayers Against Higher Health Costs. That report, titled "Trends in Health Spending and Coverage in California: 1991-2010" shows that employer health spending -the amount employers spend on their employee health care component-in California exceeds the national average by 8 percent. However, the study also reports overall health care costs are decreasing statewide by as much as $8.6 billion due to employer insistence on managed care.

"Employers in California have sought to control the rising cost of health care by expanding enrollment in managed care plans emphasizing primary care and the reduced utilization of inpatient hospital services, and by promoting price competition among health care providers," the report states. "Their efforts have led to an unprecedented reduction in the rate of growth in private health insurance costs, a substantial reduction in the use of California''s hospitals, and reductions in income for certain physician specialties."

Despite statistics declaring reductions in health spending, however, most employers, and their employees, only see their premiums inching higher and higher each year, often with less access to services.

One local company, for example, saw its insurance rates under the Principal Mutual Insurance plan increase more than 30 percent in only three years time. Switching to a Blue Cross PPO in 1996 meant an immediate decease of 36 percent, and less access to doctors. But in just two years, rates at Blue Cross have already jumped more than 20 percent.

The Downtown Restaurant Group, which includes Tarpy''s, Rio Grill and Montrio restaurants, this year switched to the local non-profit CHP because of the increasing cost of insurance with an out-of-state provider which has since pulled out of California, reportedly because of the high cost of doing business here. "We spend a ton of money" on health insurance for the company''s 100 full-time employees, says Downtown''s Controller Renate Robe. Among the benefits of the CHP, says Robe, is that the money stays in the community and allows Downtown to sit on the employer advisory council, while offering competitive rates to other insurance providers. Currently CHP is only available to employers with 50 or more employees, but officers say that the plan will become open to small companies and individuals hopefully within the next year.

Some say plans like CHP, where health care is not about making a profit, may be the only equitable solution for managed care. "The only hope that we see for being able to provide quality care, is to have a non-profit system," says Del Piero.

Others say the free market competition encouraged by managed care is working just as it should. "In the next few years, I hope what you find is a more competitive environment and a cost control environment without overly effecting the treatment of patients, but eliminating expensive costs. But what that is going to take is partnerships with the hospitals," says Barrett.

While the best delivery of health care is something that will surely be debated for a long time to come, there is one thing managed care has prompted that everyone seems to agree on: personal responsibility.

Based on a philosophy of keeping people well as the best means to keep health care costs low, managed care has inspired a whole new industry of healthy community programs, often administered through community hospitals. But there also needs to be a realization that health care will never again be the stuff of Dr. Welby.

"Responsibility, that''s an important part of it," says CHOMP''s Hudson. "We think it''s important to provide education opportunities [to learn] healthy lifestyles, so they can become co-managers in their health care." cw