Lessons to Be Learned from Harvard Pilgrim HMO's Fiscal Roller Coaster Ride

The recent high-profile financial difficulties of Harvard Pilgrim Health Care, the largest HMO in Massachusetts and consistently rated as one of the top ten HMOs in the nation, shed light on many problems common to health insurers throughout the country. This article explores those difficulties in the context of the short but complicated history of Harvard Pilgrim, and its regulatory and competitive environments. The state legislation which made a receivership proceeding possible for Harvard Pilgrim offered some protection for subscribers, but failed to provide the means for achieving a long term solution. The statute merely presented a method for staving off immediate collapse by temporarily protecting the plan from dissolution, and forcing the plan's contracting providers to continue delivering care even if owed money by the plan. The article concludes by drawing lessons for understanding and ideally avoiding similar managed care nearfatalities in the future.