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Copyright 1999 The Houston Chronicle Publishing Company  
The Houston Chronicle

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January 31, 1999, Sunday 2 STAR EDITION


LENGTH: 832 words

HEADLINE: 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 priorities.

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.

These laws 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 expensive?

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.

Another typical 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?

GRAPHIC: Drawing

TYPE: Editorial Opinion

LOAD-DATE: February 1, 1999

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