Copyright 1999 The Houston Chronicle Publishing Company
The Houston Chronicle
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January 31, 1999, Sunday 2 STAR EDITION
SECTION: OUTLOOK; Pg. 5
LENGTH: 832 words
Managed care can do the job - if politicians would quit meddling
BYLINE: MERRILL MATTHEWS JR.; Matthews is vice
president of domestic policy at the National Center for Policy Analysis, a
nonprofit, nonpartisan research institute based in Dallas.
DENNIS Hastert, the new speaker of the House
from Illinois, says health-care reform - by which he means managed-care
reform that relies largely on the free market - is one of his top
He'll get a big argument from congressional Democrats, who
also are pushing hard for managed-care reform - although from a
much different ideological perspective. For years, Democrats have been battling
to expand government control over the health insurance system, with
managed-care reform being only the most recent skirmish.
You can see this battle clearly in Congress, but also in the state
legislatures. According to the National Conference of State Legislatures, 18
states adopted comprehensive laws in 1997, encompassing most or all of the basic
managed-care reform proposals like those being considered by
Congress. And 10 more states adopted such laws in 1998.
include provisions such as banning financial incentives that could induce
doctors to cut back on care, providing greater access to emergency rooms and
specialists, and trying to resolve disputes between a health plan and a patient.
While many of the earlier state legislative proposals received support
from both Republicans and Democrats, managed-care reform
increasingly is becoming a partisan issue in which Democrats are trying to score
political points against Republicans.
Take Virginia, for example. Just
as Gov. Jim Gilmore, a Republican, was getting ready to deliver his State of the
Commonwealth address on Jan. 13, Democrats dropped "surprise" anti-managed care
legislation that included a number of the usual reforms, but also would permit
patients to sue their HMOs.
Virginia Democrats conceded that the bill
might raise the cost of health insurance by as much as 10 percent, but replied
that the increase in quality and coverage was worth it. However, the timing
demonstrated that the issue was political, not about health-care quality.
Would premiums only rise by 10 percent? Remember, this projection comes
from the promoters of the bill who have an interest in downplaying the adverse
consequences of their legislation.
An analysis by Milliman &
Robertson, one of the leading actuarial firms in the country, of several
managed-care reforms estimated that they could drive up the
cost of health insurance on average by 23 percent - and that analysis excluded
the provision that would expand liability. Estimates for the price-increasing
impact of the liability provision alone run between 4 percent and 8 percent.
Thus, the cost of an average managed-care policy under legislation like
that proposed in Virginia could easily climb 15 percent to 20 percent, making a
$ 5,000 family health insurance policy cost between $ 5,750 and $ 6,000. Now
really, is this any time to be doing things to make health insurance more
A recent survey by the resource consulting firm Towers Perrin
found that large employers expect health insurance premiums to increase by 7
percent this year. And large employers are able to avoid most of the health
insurance laws imposed by state legislatures.
By contrast, small
employers and people who buy individual policies, such as the self-employed, are
the ones most affected by these state insurance laws, and they are looking at
premium increases of between 20 percent and 40 percent - in part because of
legislation already passed by state lawmakers.
Such increases drive
low-income people and small employers out of the market for health insurance,
increasing the number of uninsured - at a time when the number of uninsured has
reached record highs.
Ironically, the "reforms" being imposed by state
legislatures are often illusory. For example, when the General Accounting Office
did a survey of HMO-physician contracts for gag clauses, it found none.
Nevertheless, Virginia Democrats want to eliminate them.
reform is mandating an external appeals process, whereby physicians and patients
can take complaints to an external panel. But like gag clauses, managed-care
plans have been voluntarily adopting this process and problems have been far
fewer than many predicted.
For example, when Texas' external review law
went into effect in 1997, the state Department of Insurance projected 4,400
external appeals in the first year. It actually received only 218, and 94 of
those were either completely or partially overturned in favor of the patient.
In addition, a new survey by the Kaiser Family Foundation of the
external appeals process in 12 states found that between 33 and 60 percent were
overturned in favor of the patients.
While managed care still has its
problems, it has been working to solve them - if only state legislatures and
Congress will give it a little time.
Unfortunately, that may not fit
many policy-makers' political agendas. Why wait for managed care to respond to
consumer demand when politicians can gain some political points - and perhaps
some votes - by bashing and reforming managed care?
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