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Richard W. Porter Subject Files
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Originally Processed With FOIA(s):
FOIA Number:
1999-0118-F
1999-0118-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Cabinet Affairs, White House Office of
Series:
Porter, Richard, Files
Subseries:
OA/ID Number:
07136
Folder ID Number:
07136-005
Folder Title:
Health Care Reform Studies III
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G
10
14
7
1
HEALTH CARE REFORM STUDIES
III
"Reigle Options"
Summary of Bipartisan Senate Working Group Proposal
A 15-member bipartisan working group comprised of members of the
Senate Committees on Finance and Labor and Human Resources was
established in July, 1989. Group members include Sens. Riegle,
Mitchell, Rockefeller, Kennedy, Durenburger, Chafee and Hatch.
An options document was released on March 10, 1990. The purpose
of the document is to assist the development of a consensus
approach to the problem of access to health care for the
uninsured and for bringing increases in health care costs under
control. The proposal makes few specific recommendations,
primarily listing the various options that the working group is
considering. The document is being distributed to health care
provider, labor, consumer and other interested groups for
comment. The group hopes to develop legislation for introduction
later this year.
Summary of Options:
1)
Expand private coverage. Options under consideration
include:
employer role and strategies to mandate or encourage
employer participation
special provisions to assist small business
mandatory and/or voluntary insurance market reform
benefit package and premium responsibility
individual responsibility
2)
Expand public coverage for residual uninsured through two-
part approach:
expand Medicaid to cover all people with income below
100% of the Federal poverty level; and,
create a new public program or build on Medicaid for
those at or above 100% of poverty, using a sliding
scale subsidy.
Options include building on current Medicaid program
vs. restructuring Medicaid.
3)
Cost-containment options include:
Federal regulatory cost controls
national initiatives on effectiveness, quality,
outcomes research, practice guidelines, education
insurance market reforms
medical liability reform
4)
Financing options include redirecting existing health care
expenditures and/or developing specific suggestions on new
sources of funding
Working Group Options
GOAL: Ensure Health Care Coverage for all Uninsured People
APPROACH: Maximize private health care coverage: cover remaining
uninsured through expanded public coverage
RATIONALE:
Universal coverage would:
reduce costs for businesses currently providing
coverage;
ensure fairer apportionment of payment
responsibilities;
reduce costs for small businesses through insurance
market reform; and,
maintain control over payment rates for public program
participants.
PRIVATE COVERAGE
Part 1:
INITIATIVES TO EXPAND PRIVATE COVERAGE
ISSUE: Mechanism
Option 1: Require all employers to provide health insurance
coverage meeting Federal standards to employers
and dependents.
OR
Option 2: Combined program of incentives and disincentives
to provide coverage, such as offering employers
the option of providing coverage or paying a fee
set as a percentage of payroll. Fee would be used
to cover part of the cost of public coverage for
employer's workers and dependents. Incentives
could include items in Option 3 below.
OR
Option 3: Provide employers only incentives to offer
coverage, which could include:
pre-emption of state mandates;
subsidies to small business offering coverage
for the first time;
1
grants to States offering programs to include
coverage;
establishment of high risk pools for
individuals unable to purchase insurance in
current market because of ill health;
improvements in small employer insurance
market;
improvement of deductibility of premiums paid
by self-employed, credit to businesses with
no taxable income offering coverage;
allowing employers to pay a part of the
premium for coverage under a State's Medicaid
plan or other public coverage.
AND / OR
Option 4: Establish a refundable tax credit to uninsured
individuals to purchase coverage; encourage
individual rather than employer selection of plan.
AND / OR
Option 5: Incentives/Mandates to individuals for purchase of
employer provided health insurance, which could
include:
Require employee to purchase for self and
dependent.
Offer employee option of purchasing health
insurance or payment of fee to be used in
public program.
2
ISSUE: Benefit Package (Including Premium Responsibility)
Option 1: No package specified; employers contribute
specified amount.
OR
Option 2: Package specified, employers contribute specified
amount. Benefit package could include:
Catastrophic only
Basic only with emphasis on primary and
preventive care; or,
Basic and catastrophic package.
OR
Option 3: Package specified under Option 2 above, but no
employer contribution required.
ISSUE: Individual Participation in Program
Option 1: Uninsured individuals should be required to accept
employer coverage.
OR
Option 2: Uninsured individuals should not be required to
accept coverage.
ISSUE: Public Subsidy for Low-Income People
Option 1: Provide public subsidies for cost-sharing for
low-income people.
OR
Option 2: Do not provide public subsidies for cost-sharing
for low-income people.
3
Part 2: SPECIAL PROVISIONS FOR SMALL BUSINESS
Recommendation: Provide improved tax treatment for
self-employed, greater opportunities for pooling, reform of small
business insurance market, special treatment for new, small
businesses, small business subsidies under certain circumstances.
(NOTE: Working group has not yet defined "small business").
ISSUE: Mandatory vs. Voluntary Insurance Market Reform
Option 1: Voluntary insurance market reform, including:
allowing groups of small businesses to offer
stripped-down basic plan to members of groups
by exempting them from state mandates;
amending current ERISA rules prohibiting the
formation of multi-employer trusts (METs) in
certain circumstances;
allowing small business to buy-in to Medicaid
or other public program;
providing seed money to states to establish
small business pools; require states to
establish subsidized high risk pools for
uninsurable individuals and groups.
OR
Option 2: Require insurance companies to meet Federal or
State standards to participate in small business
market, including:
prohibiting medical underwriting;
community-rated coverage, acceptance of all
applicants;
availability of managed care.
OR
Option 3: Require states to establish a new, state-sponsored
insurance mechanism for small businesses; options:
insure all small businesses (could be through
Medicaid), or
assure, through subsidies, that businesses
participating in state pool pay no more than
average private market costs.
4
B. PUBLIC COVERAGE
Part 1:
INDIVIDUALS WITH INCOMES UNDER 100 PERCENT OF THE
FEDERAL POVERTY LEVEL
Recommendation: Expand Medicaid to cover all individuals under
the Federal poverty level regardless of their family composition
(i.e., eliminate all categorical eligibility requirements).
ISSUE: Program Structure
Option 1: Keep current Medicaid system.
OR
Option 2: Modify current Medicaid system, for example:
Change benefit package to include preventive
primary care or catastrophic benefits;
Allow state maximum flexibility to design
innovative delivery systems;
Redesign reimbursement, paperwork, and claims
procedures
Federalize benefits, including scope and
duration;
Require enrollment in (or option to enroll
in) managed care programs.
Part 2:
INDIVIDUALS AT OR ABOVE 100 PERCENT OF THE FEDERAL
POVERTY LEVEL WHO ARE NOT COVERED THROUGH PRIVATE
COVERAGE
Recommendation: Create new public coverage either through
existing Medicaid program or new public program.
Recommendation: Require individuals covered by this program to
contribute toward the cost of coverage based on their ability to
pay.
5
ISSUE: Program Structure
Option 1: State flexibility to establish program within
Federal standards.
OR
Option 2: Federal requirement for State to provide coverage.
OR
Option 3: Federal program structured similar to Medicare.
All of the above Options could include the following:
health insurance pools;
extending Medicaid (e.g., Medicaid buy-in) ;
providing flexibility within delivery of services,
(e.g., allow incentives for creative delivery systems
such as community health centers) ;
requiring certain delivery systems; or,
high risk pools for uninsurable individuals.
ISSUE: Sources of Funding
Option 1: Federal
OR
Option 2: State
OR
Option 3: Federal/State combination
AND / OR
Option 4: Employer/employee contribution with any of the
options
6
ISSUE: Benefits
Option 1: Benefits same as those established in Medicaid,
including scope and duration.
OR
Option 2: Provide enhanced benefit structure.
OR
Option 3: Federalize (i.e., standardize) benefits.
ISSUE: Individual Participation in Program
Option 1: Uninsured individuals should be required to accept
employer coverage.
OR
Option 2: Uninsured individuals should not be required to
accept employer coverage.
7
III. COST CONTAINMENT
Option 1: Federal Government regulatory cost controls, for
example:
rate-setting;
health planning and PRO oversight of private
patients;
expenditure targets.
OR
Option 2: Alternative national initiatives.
Option 2A:
Immediate actions to control costs,
develop long-term strategies.
+
Use of Federal leverage to implement recently
enacted outcomes research/standards development
legislation as payment device.
+
Implementation of the Agency for Health Care
Policy and Research treatment practice guidelines,
which could be used to establish reimbursement
differentials. Would result in some initial
savings and reasonable assurance to the public and
payors that physicians are providing quality and
appropriate care for each dollar spent. (Rand
Corporation research shows that 10-30 percent of
major surgical procedures are inappropriate.)
+
Use of public program leverage to implement cost-
effective systems of care. Encourage managed care
options, for example, reimbursement differentials
and revised HMO Act. Require beneficiaries to
enroll in managed care programs.
+
Direct chronically and catastrophically ill
individuals to "centers of excellence, " so
designated because of their high quality care and
their economies of scale in treating many
individuals of a similar condition. This would
consolidate hospital capacity.
+
Encourage cooperative agreements between hospitals
and community health centers or other ambulatory
care providers to reduce emergency room treatment
for non-emergency care.
8
+
Establish grant program to states, providers, and
private payers to develop and implement innovative
cost control methods.
+
Require providers to disclose standardized cost
and quality data to assist in health care purchase
decisions.
+
Establish a National Health Cost Inflation Review
Commission to set annual voluntary targets,
monitor cost increases, make recommendations.
+
Develop measures to make recipients of care more
sensitive to the costs of care, e.g.,
standardizing an insurance package and capping the
tax deduction at the cost of the basic package or
structuring co-insurance payments to increase
awareness of costs.
AND / OR
O
Option 2B: Insurance market reforms
+
Shift insurance industry focus from risk selection
to cost-effective delivery, managed care, provider
negotiations.
+
Anti-trust reforms to encourage self-regulation by
providers and cooperative agreements between
insurance companies and managed care providers.
+
Create national coordination of benefits registry
to prevent duplication of benefits and thus assure
appropriate insurance premium rates.
+
Pre-empt state regulation of the content of health
insurance.
AND / OR
Option 3: Private market reforms
Modify current tax preferences to shift coverage to
insurable events, create greater consumer awareness of
cost of care and benefits.
Vouchers for individual rather than group purchase of
coverage.
Enthoven approach: employer mandate to pay flat
contribution toward health insurance coverage; employee
encouraged to choose less expensive plans.
9
Require insurance companies to cover catastrophic
illnesses, and certain preventive medical procedures
such as mammograms and immunizations. This would leave
individuals responsible for paying for regular doctor
visits, e.g., a visit for a cold.
AND / OR
Option 4: Medical Liability Reform
Leave acknowledged problems to states for reform.
Federal government pre-empts the field in terms of
certain traditional malpractice reforms. For example,
the Federal government could initiate a uniform cap on
non-economic damages, a Federal collateral source rule
or a more uniform statute of limitations rule, and
allow the use of health care practice guidelines as a
defense.
Federal government gives states incentives to enact
certain alternative dispute resolution procedures for
medical malpractice claims. These alternatives may
include a voluntary, parallel arbitration procedure or
a mandated administrative alternative which removes
malpractice claims from the judicial system.
Federal government enacts its own alternative dispute
resolution procedure for medical malpractice claims.
Could include a special fund, damage determination
only, improved discipline process and enforcement for
physician license boards.
Explore no-fault alternatives using accelerated
compensable events or other methods which are analogous
to the workers compensation system.
Patient protection reforms, explore alternative, more
successful methods for deterring negligence by doctors
and for preventing adverse events to patients.
Anti-trust changes would be necessary to allow
sanctions by review organizations and licensing boards.
Explore methods of reducing insurance rates for
physicians, particularly OB/GYNs.
10
IV. FINANCING
Option 1: Utilizing the existing funds currently available
in health care system today more effectively by
private and public sector reforms
AND / OR
Option 2: Specific suggestions on new sources of funding for
expanding access to care, e.g., new fees or
revenues
V. PLAN IMPLEMENTATION
General issues for consideration:
Phase-in of overall plan.
Establish Commission to oversee implementation of plan.
11
UNITED STATES
UNITED
STATES
OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF PERSONNEL INFORMATION
WASHINGTON, D.C. 20415
OFFICE OF THE DIRECTOR
MAY 23 1990
MEMORANDUM FOR THE TASK FORCE ON FEDERAL EMPLOYEE
HEALTH BENEFITS
FROM:
CONSTANCE BERRY NEWMAN
DIRECTOR
Subject:
Meeting of the Task Force on Federal
Employee Health Benefits
The accompanying material on trends in cost containment
was prepared by HHS for our meeting this Thursday.
Unfortunately, the paper arrived shortly after the OPM
materials were sent to you.
Attachment
Trends in Cost Containment
This paper reviews current trends in private-sector cost contain-
ment initiatives. Special attention is given to sub-topics
related to alternative delivery systems and employee behavior.
Introduction. Per-capita health care costs are rising faster than background
inflation because of increasing volume, intensity, and technological sophis-
tication of services delivered. For example, per-capita doctor visits has
risen from 4 in 1980 to 6 today. The X-ray costing $100 is now frequently
bypassed in favor of magnetic resonance imaging costing $500 or $1,000. The
latter example highlights the fact that much of what is called cost inflation
represents increased quality or scope of medical practice; uncomplicated cost-
control objectives pursued by employers or government payers may not be
entirely adequate as a guide to social policy, since consumers may prefer and
be willing to pay for some of the increasingly costly sophistication of modern
medicine, even if that means foregoing other forms of consumption. Unfor-
tunately, reliance on insurance and tax financing of health care bypasses
normal market mechanisms normally used by consumers to signal preferences.
"Cost" in the context of employer-sponsored health benefits refers to total
expenditure -- the cost of producing and delivering a given unit of health
care services, times the volume or quantity of units delivered per unit of
time. Efforts to control expenditure are directed at one or both factors.
Utilization control, for example, focuses narrowly on volume. Other "managed
care" measures discussed below attempt to look at wider issues affecting
production efficiency.
Managed Care
Larger employers are now moving away from traditional indemnity health
insurance toward arrangements that use incentives to guide and constrain
physician practice styles. The shift from fee-for-service to capitation
payment represents a radical change in incentives. A more indirect incentive
occurs in the selection and retention by Preferred Provider Organizations
(PPOs) of those physicians following a suitably cost-conscious practice style.
Employers are increasingly able to select among a growing number of competing
health care plans and intermediaries specializing in managed care techniques.¹
Blue Cross-Blue Shield, Aetna, Travelers, and new organizations such as US
Healthcare are working to form their own proprietary national networks of
hospitals and physicians, each seeking the capability of serving multi-state
I This discussion neglects the plight of small employers who have a problem finding steady insurance
coverage of any kind. Special forms of cost containment, for example, reducing the scope of state-mandated
benefits, are relevant to this sector more than to large employers.
employers. These emerging networks seem intent on not just implementing, but
also elaborating on the basic ideas behind PPOs and Health Maintenance
Organizations (HMOs). The most recent mutant is the "Point-of-Service", (POS)
plan, and HMO or PPO which allows enrollees to use non-participating providers
but imposes a higher cost-sharing rate for the privilege.
The situation today is one of transition. Physicians in large cities often
belong to many different PPO networks, each of which holds little if any
leverage over physician practice styles. Leading proponents of the managed
care movement see the next few years being a period of consolidation and
strengthening of networks' operating capability. Both trends should con-
tribute to increasing the economic clout of managed care organizations vis-a-
vis physicians.
The success of managed care in slowing inflation will depend not only on being
able to induce physicians to practice more frugally, but also on discovering
the boundaries of cost-effective medicine. This suggests a need for research
and development of new information about the effectiveness of particular
medical procedures and treatments. (The federal government is now committed
to making a significant investment in such research.) In the meanwhile, much
progress can be made on the basis of available knowledge.
Physicians have mixed feeling about the movement toward managed care. Many
see it as a threat to their economic interests or consider it to be inconsis-
tent with a preferred style of medicine.2
Predicting the future. The financing and management structure of health care
in the private sector is evolving rapidly, with progress occurring in the form
of a multitude of uncoordinated and haphazard innovations. Formal studies of
early PPOs are now of questionable utility because of these rapid changes.
Quantitative estimates of the efficacy of group-model HMOs relative to fee-
for-service practice developed by the Rand Health Insurance Study based on
late 1970's data is now of questionable utility because of changes in both HMO
and fee-for-service practice. It would be risky to forecast rates of progress
of different delivery-financing approaches, and impossible to predict their
respective future market shares, since those shares will reflect factors other
than inherent economic efficiency. Nevertheless, a few things can be said
about particular managed care entities.
Group-model HMOs. Because of the incentive effects of capitation
financing and the ability of group HMOs to directly influence practice
style of member physicians, this form offers the greatest potential for
long-term economy. Institutional and legal barriers to full effective-
2 Growing intellectual acceptance of managed care principles among physician associations and academic
groups, combined with continued efforts to break down institutional and legal barriers to managed care,
offer indications that organized resistance will become increasingly fragmented and irrelevant.
3 The Rand Health Insurance Experiment, by controlling effects due to biased selection, was able
demonstrate significant economic superiority of one group-model HMO over fee-for-service medicine in
efficiency of delivering care, with the most dramatic difference being in the well-known propensity of HMOs
to for-service. reduce hospitalization. Quality of care delivered by the HMO was as good as quality delivered under fee-
2
ness (HMO Act restrictions, vulnerability to state mandates, over-
emphasis on comprehensive and preventive care, community rating or
shadow pricing instead of experience rating) are now being eliminated or
revised in ways that suggest a future in which HMOs will be compete more
successfully against organizations that cannot match HMOs' inherent
efficiency advantage.
Individual Practice Associations (IPAs), PPOs, and POS Networks. As
more and more physicians' economic well-being comes to depend on
maintaining a satisfactory relationship with one or several networks,
one may expect those physicians to conform increasingly to managed care
protocols. In such circumstances, networks should be able to compete
effectively with group HMOs. The outcome of an ongoing process of
building effective networks serving the private sector should become
evident within the next five years.
Managed indemnity plans. Indemnity plans that do not restrict enrollees
choice of provider are now almost all practicing some form of utiliza-
tion control. Methods of utilization review check physician decisions
against rules on appropriateness of setting and treatment. (This basic
technique has been shown to be effective, compared to the unfettered
practice standards that were once the rule.) Pre-admission authorizá-
tion and second opinions prior to surgery are further examples of
standard control measures. Over the next several years, the relative
advantages of these techniques çould fade if, as appears to be the case,
practice styles of physicians generally come to incorporate constraints
first introduced through utilization review. At the same time, the
function of simple utilization review could be assimilated by networks.
(Networks attempt to induce physicians to follow economic practice
patterns automatically, without having to be reminded on a case-by-case
basis by utilization reviewers.)
HMO growth. Even assuming that institutional and philosophical changes
allow the superior potential efficiency of group-model HMOs to be more
fully realized in the form of significantly lower premiums compared to
networks, this type of organization is limited in potential growth rate
because of inherent difficulty, compared to other more loosely-organized
networks, in expanding into new geographic areas. POS arrangements can
assist an expanding HMO bridge geographic gaps, thereby improving its
ability to market to employers with widely dispersed employees.
Other managed care measures. Private sector employers are increasingly
adopting special "carve-out" arrangements for controlling mental health care
and substance abuse benefits, an area of exploding costs. Increasing numbers
of special-purpose companies offer gatekeeper services (often coordinated with
Employee Assistance Programs), combined with referrals to network practition-
A growing number of networks allow enrollees to use non-member providers at a higher out-of-pocket
cost to the enrollee. This arrangement appeals to those who seek lower premiums without having to give up
access to a regular physician.
3
ers. To the extent that "carve-outs" tend to compartmentalize treatment,
special efforts may be needed to coordinate treatment for individuals who need
both medical and mental health services.
Other Approaches to Controlling Cost
Managed care innovations in the private sector seem promising. As they become
more widely applied within Medicare and Medicaid, their benefits will be more
widely felt. Nevertheless, it is an open question whether these innovations
can produce an acceptable degree of long-term price stability given the
unlimited potential for advances in sophisticated technology. If rapid
inflation continues, other methods of cost containment -- some traditionally
used by private-sector health insurance, others available only to government -
- may come to be utilized.
Cost Sharing. Deductibles and coinsurance are the classic techniques used to
encourage economizing. The Rand Health Insurance Study demonstrated the
effectiveness of cost sharing in controlling total expenditure. The effect
was observed to operate primarily by discouraging initial physician visits.
Cost sharing had only a small effect on amount of hospitalization. The
additional services consumed by those enrolled in free care plans was found to
produce negligible benefit in terms of health status.⁶
Cost sharing is likely to retain an important function even though traditional
fee-for-service indemnity medicine gives ground to advanced forms of managed
care. For example, higher coinsurance and deductibles are imposed by point-
of-service plans to encourage enrollees to stay "in plan." While some group-
model HMOs have as a matter of principle avoided cost sharing, depending
entirely on provider-controlled "rationing" of services, other HMOs use CO-
payments as a means of encouraging enrollees to use HMO resources wisely.
Controls. Direct volume targets and relative-value fee schedules are being
introduced in Medicare. If these measures are not effective, more onerous
controls can be expected. In a managed care environment, controls over total
per-enrollee expenditure could be administered in principle. States attempt-
ing to cope with limited Medicaid budgets are looking to explicit rationing as
a means of making allocations more rational. Oregon has proposed reducing
Medicaid outlays on costly services such as transplants and spending more on
basic services now denied to many with low incomes because already inadequate
budgets are drained by a few extraordinary procedures, often for individuals
with minimal chances of recovery or even survival.
6
This new form of management is now being resisted by psychiatrists who have prospered under loose and
generous coverage of traditional indemnity plans. This contrasts to the generally supportive posture of
associations representing other medical specialties with regard to managed care innovations.
6 This result applies to the general population. Cost sharing tied to income levels (for example,
"deductible equal to the smaller of 1 percent of income or $1,000") allows the advantages of significant
cost sharing to be applied to middle and upper-income families while limiting the barrier posed to lower-
income families.
4
Employee Behavior and Preferences.
The pace of movement to managed care and/or to increased cost sharing is
influenced primarily by the relationship between employers and their employ-
ees. Moving from traditional forms of health insurance represents a difficult
decision and considerable administrative effort. Cafeteria plans and flexible
spending accounts have been used by employers to facilitate such transitions.
Mergers between companies provide a cover for introducing managed health
benefits. Increasingly, companies are reacting to cost increases that they
consider no longer tolerable. Although companies shifting to managed care
often limited that change to salaried workers, labor unions are becoming more
receptive to the idea that they will be better off if the company's health
care cost increases are slowed.
If an employer wishes to impose a single indemnity-type PPO in place of what
had been an unconstrained indemnity plan, the main problem of persuasion and
explanation may be mitigated by a cash trade-off. On the other hand, moving
to managed care may be easier if an employer offers a choice of plans. The
objective then is to contrive an employer contribution scheme under which
employee decisions are guided by relative price incentives that conform with
relative costs of different options.
From this standpoint, an employer contribution should be pegged to the most
economical, least costly plan (possibly, but not necessarily an HMO).
Employees choosing more expensive plans would then pay an amount related to
incremental costs. Other common employer contribution schemes, for example,
paying a fixed percentage of total cost of various plans, or contributing more
than enough for an acceptable low-cost plan, reduce or dilute the appeal to
employees of lower-cost plans, and thus retard migration to managed care.
DHHS/OASPE
May 22, 1990
5
UNITED STATES
UNITED STATES
OFFICE OF PERSONNEL MANAGEMENT
231440 OF PERSONNEL
WASHINGTON, D.C. 20415
OFFICE OF THE DIRECTOR
May 17, 1990
MEMORANDUM FOR THE TASK FORCE ON FEDERAL EMPLOYEE
HEALTH BENEFITS B. hamm
FROM:
CONSTANCE BERRY NEWMAN
DIRECTOR
SUBJECT:
Meeting of the Task Force on Federal
Employee Health Benefits
Our rescheduled meeting will be Thursday, May 24, at
10:30 in Room 180 of the Old Executive Office Building.
:
Please call Mary Tsivgoulis at 456-2564 by close of
business Tuesday, May 22, so she can arrange for
clearance.
:
The purpose of the meeting is to discuss various
efforts that others have made at controlling costs and
improving quality and then to decide which particular
approaches deserve further development to determine
whether they should become a part of our reform
proposal. Papers from HHS and OPM will be distributed
next week.
I look forward to seeing you.
UNITED
STATES
UNITED STATES
OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF PERSONNEL
WASHINGTON, D.C. 20415
OFFICE OF THE DIRECTOR
MAY 22 1990
MEMORANDUM FOR THE TASK FORCE ON FEDERAL EMPLOYEE
HEALTH BENEFITS
FROM:
CONSTANCE BERRY wann NEWMAN
DIRECTOR
SUBJECT:
Meeting of the Task Force on Federal
Employee Health Benefits
OPM has conducted a survey of private sector employers
to assess how they have addressed the problem of
controlling escalating health care costs while ensuring
the need for quality care. Attached is a survey of the
findings.
The overriding issue to be discussed at the next
meeting is: Are there lessons from the private sector
that should influence the design of a required FEHBP?
Among the specific issues we could discuss are:
1.
Should we have deductibles or premiums based
on salary bands?
2.
Should we have waiting periods?
3.
Should we explore point of service options?
4.
Should we use contractors to manage HMOs/networks
of HMOs?
5.
Should we contract with separate TPAs for
substance abuse?
6.
Should we look more closely at the availability of
PPOs across the country or in particular
geographic locations?
7.
Do we need to review the standards in place now
for quality assurance associated with PPOs?
8.
How can we review the sub-contractors performance
on large case management?
Attachment
Reform Recommendations Confirmed by Survey
1.
OPM needs to retain the flexibility to design the
delivery systems and benefits under a reformed
program.
2.
Self insurance provides OPM the control and
discretion necessary to experiment and to move
away from the more traditional/passive forms of
contracting.
3.
Cost sharing of the premium is necessary to get
the subscribers involved in cost containment.
4.
Employees and retirees have different health care
needs and utilization experience, thus requiring
separate benefits and rates for these two groups.
5.
TPAs are being utilized through ASO contracts to
process claims and perform certain administrative
functions.
6.
Too many indemnity plans and HMOs cause problems
of administration and do very little for effective
cost containment.
7.
New and innovative delivery systems and cost
containment efforts have to be explored and tested
to obtain maximum savings.
OPM's Review of Private Sector Health Benefits Program
Practices
Introduction
As part of the process of developing recommendations on
specific benefit and cost containment designs as a part of the
FEHB reform initiative, OPM surveyed a number of private sector
employers to assess how they have addressed the problem of
controlling escalating health care costs while ensuring that
the need for quality care is met.
Our survey involved a review of how they have structured their
health benefits programs, designed or changed their benefits
packages and their health care delivery systems and what their
experiences have been in developing effective cost containment
measures. We selected a number of large companies to review
which had been featured for cost containment efforts or
innovative delivery systems and, which on a smaller scale,
resembled the Federal Government in diversity of workforce and
function, geographic dispersion, broad salary ranges, large
numbers of retirees; etc.
The results, while not definitive, surfaced a number of
recurring themes/issues. It was clear that none of the firms
surveyed were confident that they had found the universal
solution to the health care problem, or that the approach they
had taken would work for their own firm for the long haul.
2
However, it is apparent that companies in the private sector
are willing to experiment. Many times they are experimenting
based less on what they know will work than on their experience
with what has not worked. Different things work well or less
well depending upon the company's particular situation.
The health benefits area is extremely dynamic. Most companies
want the flexibility to change their programs as the health
care environment changes, particularly in those areas affecting
cost containment such as delivery system designs and benefit
structures. The experiments we see taking place are relatively
new. Companies are hopeful that initial gains can be sustained
and broadened. However, at this time, there is no
comprehensive body of data available that demonstrates that any
one solution is the best or the final answer for the long haul.
Companies are concerned about balancing the needs of employees
for quality health care programs with their own need to control
unacceptable increases in their bottom-line health care
costs. In situations where employees already share premium
costs (or union involvement precludes that possibility), and
co-payments, co-insurance and deductibles are already in place
companies have focused increased attention on their delivery
systems, refinements in benefit design, and cost containment at
the provider level. Many companies have recognized the need to
manage or limit choice and are beginning to structure their
delivery models and design their benefit packages in such a way
3
as to channel employees into those systems and plans that work
well for them and are also cost effective.
Companies are beginning to view themselves as active purchasers
of group health insurance rather than passive contractors in a
process over which they have no control. Private sector
companies have leverage and they use it. They are beginning to
determine the benefits, the delivery system, and the various
types of cost containment components they want in place, and
they are becoming assertive in this area with the industry.
They recognize that they can only get a handle on their health
care costs and maintain a quality health care program for their
employees by retaining the flexibility and control necessary to
(1) design alternative delivery systems, (2) tailor benefit
packages, and (3) require effective administrative measures
such as pre-admission certification and large case management
as a part of the overall program. All of these are elements of
an effective cost control program. None will work as well
independent of the others and none are possible if the employer
doesn't have the flexibility and the desire to develop the
three necessary components of cost containment.
Self Insurance
The majority of employers we contacted or visited self insured
and had done SO for many years. The reasons for doing SO
varied from the desire to escape state premium taxes and state
4
mandated benefits to the most important--control over
reserves. Although the results of our survey were obviously
skewed because of the size of the employers we selected and the
fact that large employers are the ones most likely to self
insure, numerous companies have recognized the advantage of
flexibility and control inherent in self insuring. We found no
stronger advocate for self insurance than the Mobil
Corporation. To quote Mobil on this point, "You will save
money from self insurance
....
We don't know of anyone moving
away for self insurance who has tried it
Question the
motives of those who object to it." That sentiment was echoed
by General Motors, which has the largest private health
insurance plan in America.
Risk Sharing
Even though most of the firms we surveyed self-insure, those
that have been experimenting with various delivery designs such
as managed care networks, Preferred Provider Options (PPOs),
Point of Service (POS) systems and linked or networked HMOs
have looked to their contractors more and more to accept some
of the risk associated with these relatively new design
systems. In addition, as aggressive purchasers of services,
companies view risk sharing as an opportunity to hold
contractors accountable for the kinds of results and outcomes
relating to the cost and quality of health care delivery that
were agreed to at the point of purchase. Allied Signal
5
currently demonstrates the most dramatic experiment in risk
shifting in its 3-year contract with Cigna, which includes an
absolute cap on the premium rate of increase each year.
(However, when the contract is renegotiated they anticipate
moving to even more risk sharing.) Other more conventional
risk sharing arrangements currently in place, which vary from
company to company, involve putting the contractor at risk for
a percentage of administrative and/or claims expenses. One
pattern has been for the company to self insure all claims
costs but to share the risk for a portion of the administrative
expenses if claims exceed a specified target.
Cost Containment
Cost containment measures are evidenced in a number of ways:
(1) transfer of costs to the employees through benefit design,
(2) variations in the health care delivery systems, (3)
administrative mechanisms, and (4) employee behavior. Private
sector employers are using combinations of all four in their
approaches in an effort to maximize the quality of health care
available to employees, while at the same time controlling
costs.
Transfer of Costs to Employees
Many firms that used to pay the entire premium and provide
first dollar coverage no longer do so. They have shifted costs
6
to employees through a number of mechanisms such as
deductibles, co-insurance and co-pays, waiting periods for pre-
existing conditions, and limitations and exclusions. We also
learned that a number of private sector employers require cost
sharing on the premiums with at least some level of
contribution on the part of the enrolled employee. A number of
firms, such as Mobil and General Electric, set the employee
premiums based on salary bands, with the highest paid employees
paying the highest premium. Others, including Allied Signal,
Philip Morris and General Electric index deductibles to salary
levels.
Variations in Health Care Delivery Systems
The Marriott Corporation was quick to point out that they had a
limited amount of money to invest in employees health benefits
and, with a relatively low paid workforce, they could no longer
consider weakening the benefits package with cost
transferals. Instead, it looked for improved cost efficiency
through an alternative delivery system and settled on a Point
of Service Managed Care Option through an Administrative
Service Only (ASO) contract with Prudential for 25 locations
initially around the country. (A Point of Service Managed Care
Option, at least in the case of Marriott, indicates that the
subscriber has the choice of using designated preferred
providers or providers of his/her choice at the time health
care services are required. If preferred providers are used,
7
the deductible is waived and nominal co-payments are used
rather than a 70/30 co-insurance split. Under some program
designs, a preferred provider option could require a lock-in at
the time of enrollment with no provider choice left to the
subscriber at the time services are required. This would
represent a distinct enrollment alternative to an employer's
indemnity plan. "Managed Care" is more of a generic term and
could denote a gatekeeper approach as found in many HMOs or
PPOs or simply denote that some health care services are more
closely scrutinized through measures such as pre-admission
certifications and large case management. Some of the latter
features of "managed care" could also be found in indemnity
plans.)
Although Allied Signal had some success in managing health care
costs through increased deductibles, co-insurance, employee
contributions as well as some of the more traditional
administrative measures like second surgical opinions and pre-
hospital certifications; it entered into an arrangement with
CIGNA Health Plans to offer a Point of Service Managed Care
Option as an alternative to its indemnity plan and HMOs. The
reason given their employees was honest and forthright.
"Allied Signal has adopted [this option] to help control the
Corporation's increasing medical costs while still providing
employees and their families a quality health care program
Generally, if you use the network for your health care
needs, you will save money. That's because the plan provides
8
more coverage and higher benefit levels for network care
And you will be helping control medical costs by making
contributions toward your coverage - and if you go to the
network, by using more cost-efficient medical services."
At one time, HMOs were promoted as the alternative delivery
system to traditional indemnity plans. Since the law required
it, employers throughout the country offered numerous HMOs and
initially were relatively satisfied with their performance.
Now, however, with the exception of Xerox Corporation,
practically every employer we surveyed is disenchanted with the
HMOs' recent performance in generating cost savings, their rate'
setting practices, their propensity to tailor their packages to
attract the best enrollees, and/or the complications associated
with administering large numbers of HMOs. The firms we
surveyed have cut back on the number of HMOs they offer or they
are in the process of doing so. Others are not offering HMOs
where POS networks are available. Still others are using
contractors to link their HMOs into networks to achieve greater
control over the quality of care provided and benefits
offered. Xerox, for example, has contracted with networks of
selected HMOs managed by six "Health System Managers," in
essence, putting their HMO option under the control of a Third
Party Administrator (TPA). Employers like Marriott, AT&T,
General Motors and General Electric have to one degree or
another introduced or are moving to managed care approaches
such as the preferred provider option or a point of service
9
option as an alternative to their traditional indemnity plans
and HMO offerings. Allied Signal, for example, has over 80% of
their 50,000 employees using a point of service option. It is
interesting to note that, due to significant concerns about
rising costs in the areas of psychiatric care and substance
abuse, some firms have established separate pre-certification
and case management programs for this coverage outside of the
regular health insurance program. GM, for example, has
contracted with a separate TPA just to manage its substance
abuse program. It believes this approach to be SO successful
in controlling costs and improving the appropriateness of
treatment that the company is considering bringing mental
benefits under the same umbrella.
Why are employers moving in this direction? Mobil Corporation
and Metropolitan Life, the contractor for Mobil's point of
service managed care option, project that cost containment
measures built into the system will keep health care cost
increases for this option at about 2/3 those for the indemnity
plan.
Administrative Mechanisms
These measures differ from the transfer of costs in that they
do not transfer costs to employees directly, they are not
benefit specific, nor are they necessarily a part of any
particular delivery system. As the name implies, they are
10
purely administrative measures which can be implemented absent
any other benefit or delivery system questions. They include
utilization review techniques, second surgical opinions,
hospital pre-certifications and large case management as well
as incentives for outpatient or ambulatory surgery.
Employers such as Mobil and AT&T no longer use second surgical
opinions since they did not prove to be cost effective. Our
own experience with outpatient surgical incentives has been
that they may well reduce in-hospital utilization but can
easily be over-utilized if sufficient levels of co-payments are
not retained to keep them from becoming too attractive.
Practically all the employers we talked with or visited use
hospital pre-certification and large case management. The
procedure varied among employers, e.g. some admissions are
placed under case management by diagnosis and others came under
case management after a certain dollar threshold had been met.
Long Range Cost Containment Measures
There is an additional category of cost containment measures
which are assumed to yield some long-term financial benefit to
the employer but evoke more in the way of potential long-term
health benefits to employeess -- wellness programs. These take
the form of smoking cessation programs, hypertension/
cholesterol/diabetes screening, weight control, stress
management, exercise programs, etc. Opinions and approaches
11
vary among employers. Some employers offer nothing in this
area while others offer numerous programs. General Electric,
for example, offers wellness programs strictly as perks and did
not view them as cost savings measures. Allied Signal views
them as an employer responsibility. With one exception, none
of the firms we surveyed supported the claims of wellness
program proponents regarding reduced health benefits
utilization and related costs savings. Coors has established a
wellness program in an attempt to impact these areas; however,
their program is unique in that lower benefits are paid unless
persons assessed to be at risk agree to participate.
Employee Behavior: Managing Choice
Sophisticated employers are beginning to develop multifaceted
strategies for attaining corporate benefit management goals.
The first step in such a plan frequently is to manage employee
choice. While the starting point for virtually every employer
we surveyed was a single indemnity plan with a few or many HMO
options, most have now focused on programs which encourage or
require employees to trade fee-for-service type total freedom
of choice for more comprehensive benefits within a managed care
delivery system of some sort.
The specific techniques vary among employers and include many
of the cost containment measures already discussed. However,
12
it is the juxtaposition of these mechanisms which operate
frequently to encourage employees to make the choices which
management believes to be in the best interest of both the
individuals and the organization.
For example, AT&T, which had always offered its employees first
dollar coverage, recently bargained an 80%/20% coinsurance
provision for out of network care while preserving first dollar
coverage after a deductible within its soon to be established
managed care networks. Marriott already has a point of service
program in place which encourages employees to choose network
providers by limiting benefits to 70% after a $250 deductible
for out of network care compared with 90% and no deductible
within the network. General Electric has taken an entirely
different approach to managing choice by limiting HMO offerings
in geographic areas where it can offer a provider network
instead.
Employees such as AT&T and General Electric believe that it is
critical to build trust by establishing an atmosphere of
concern for the individual health needs of their employees,
while educating them that managed care of some type is in their
best interest from a quality of care perspective. Only in such
an atmosphere, they feel, can an effective consumer education
program be introduced that addresses appropriateness of
treatment.
13
Several other employers, including Mobil, expressed the opinion
that ultimately it is the employee as the consumer of health
care who can and should begin to restrict utilization based on
informed decision making. All agreed that for such a program
to produce positive results employees need to see educated
consumerism as beneficial to their well being and that of their
families rather than as a means of reducing employer health
benefits costs.
Risk Pools in Private Sector
Typically, retirees under age 65 in the private sector keep the
same indemnity plan they had as employees (but in some cases
with a higher premium) and then acquire either a Medicare
supplemental plan or a Medicare carve out after age 65.
Ford Aerospace bases the premium retirees pay on their years of
service and Medicare status and offers a Medicare carve out for
over age 65 retirees. Mobil, which bases its employee
contributions on salary bands, charges retirees under age 65
the highest level of premiums for coverage and offers two
Medicare supplements for those over age 65. Allied Signal and
AT&T offer over age 65 retirees only Medicare carve outs.
Marriott offers only a Medicare Supplement for which the
retiree must pay the entire premium.
14
Observations
Employers in the private sector are moving beyond the point
of offering just indemnity plans and HMO alternatives. If
anything, the number of HMOs is being reduced, plans are
being weeded-out or consolidated into networks. Limiting
choice for employees was a consistent theme throughout.
Employers are concerned not only with bottom-line health
program costs but have real quality of care and employee
satisfaction concerns as well. This is evidenced in looking
at some of the RFPs and selection criteria for contractors
developed by employers like AT&T, Xerox, and General Motors.
Employers are balancing their cost containment interests and
their desire for a quality health program by moving beyond
the transfer of costs to employees and experimenting with new
and innovative delivery systems and administrative measures.
HMO "networks," PPOs and point of service delivery options
are in place now and seem to be working.
We have concluded from what AT&T and others have told us,
that there probably are no contractors who could set up a
nationwide network of PPOs at this time. Various companies
are strong in certain locations or geographic areas but not
15
in others. A regional approach is probably a must,
particularly for a very large firm.
Almost without exception, employers tell us that moving to
PPOs, point of service options or networks requires extensive
planning, takes longer than anticipated and requires a great
deal of employee education to gain acceptance.
Certain benefits, such as psychiatric and substance abuse
probably need to be monitored separately under pre-admission
certification and case management to be managed effectively.
Private Sector Employers Contacted/Visited
Mobil
Ford Aerospace
General Motors (visited)
General Electric
Allied Signal (visited)
Marriott
Philip Morris
AT&T
XEROX
Coors
Mobil
Self insures basic indemnity plan -- ASO contract with
Metropolitan to process claims;
About 12% of employees in HMOs -- same employer
contribution to HMO as for the indemnity plan;
Point of Service (P.O.S.) Managed Care Option offered in
California, Fairfax, and Dallas administered by Met. Met
is at risk for some portion of the administrative charges
associated with the ASO contract for this option;
POS Option captured 20% of enrollment vs. the indemnity
plan and the HMOs;
Mobil plans to expand the POS Option to Houston and
perhaps 10 other states where Met has preferred provider
arrangements;
Weeded out HMOs with low enrollment and weak financial
foundations;
Indemnity plan has deductibles based on salary of employee
-- less than $35,000 = $150 per' person/$300 family, over
$35,000 = $300 per person/$600 family. 80/20 co-insurance
with out-of-pocket maximum equalling $2,000 per
person/$4,000 per family;
POS Option has no deductible, a $200 co-payment on all
hospital admissions, and co-payments on office visits
rather than a $150 deductible and a straight 70/30 co-
insurance on practically everything including in-hospital
care -- i.e., a much richer benefits package (with some
additional benefits like physical exams) than using non
PPO providers and a somewhat richer package than the
indemnity plan with its 80/20 split;
Mobil is using the delivery system and benefit design of
the POS Option as a major cost containment initiative
currently. Mobil only uses pre-certification for
psychiatric care and substance abuse currently.
Retires under age 65 stay with the indemnity plan and pay
the higher end of the salary band, currently $175 per
month for family coverage or 1/2 that amount for self
only. At age 65, Mobil provides and pays the full cost of
a Medicare supplemental policy which provides some
additional hospital days (not the Part A deductible), 80%
of prescription drugs and private duty nursing. There is
a Senior Care Plan, costing $37.00 per person, which
covers full hospitalization, 50% of the Part A deductible
and the 20% of Part B not covered by Medicare (but not the
Part B deductible);
Mobil offers no Flexible Spending Accounts (FSAs) but
allows employees to pay health benefit premiums with pre-
tax dollars.
Ford Aerospace
Offers a self insured indemnity plan and 10 HMOs to its
12,000 active employees and 3,300 retirees -- 2/3 of which
are concentrated in California;
ASO contract with John Hancock -- also aggregrate stop
loss insurance with same company -- no risk sharing other
than this stop loss insurance;
Deductible of $150 self/$300 family, co-insurance 80/20,
out-of-pocket maximum of $600 self/$1,200 family, $1
million maximum lifetime benefits.
No second surgical opinion, pre-authorized hospital
admissions for all admissions, case management required
for psychiatric care even for outpatient visits or plan
pays considerably less;
No wellness programs, preventive medicine or LTC.
No employee premium - company pays full premium
(therefore, no FSA) ;
Increase deductibles every 3 years.
Looking at PPOs, networks of HMOs, doesn't like results
with HMOs;
Actives and retirees in same plan but retirees pay based
on years of service and Medicare status. No Medigap --
straight carve out.
GM
Self insured indemnity plan fully paid by GM, no employee
premium;
ASO contracts with Blues and Metropolitan for indemnity
plan;
HMOs also offered with same rate of payment from GM,
usually at no cost to employees;
PPO arrangment administered by Blues and Metropolitan;
GM solely at risk for all health benefit components -- no
risk sharing;
1.9 million enrollees -- 18% in HMOs -- 18% in PPO Network
Usual 80/20 split on indemnity plan after deductible of
$200 individual/$250 family. Most service under PPO
arrangment are provided at 100% with no deductible and
some additional benefits.
Managed care, pre-certification;
Addt'l out-of-pocket incurred if members goes out of PPO
network
No retirees in PPOs -- don't allow;
"Informal agreements" with Blues -- No HMO contracts;
Substance abuse pulled out of mental health benefit and
monitored by subcontract with Family Services of America;
LTC offered -- did so under duress;
Retirees get all benefits w/no cost sharing.
GE
250,000 employees;
$800 million a year for health benefits
Self insured with 3 TPAs -- BC, Met. & CIGNA on regional
basis; -- no risk sharing currently with TPAs;
Offers one indemnity plan to all employees, 168 HMOs and
networks of PPOs in some geographic areas;
Pay related premiums, deductibles and catastrophic
limitations;
Employee pays same premium in Network or out of Network
but coinsurance is higher out of Network;
All carriers send health benefits data to central point -
Medstat;
Wellness programs offered as perk - not as cost savings
measure;
Substance abuse & mental health PPOs in 4-5 places -- only
form of case management;
Offer FSA -only 4% participate, currently risky with IRS
rule on use it or lose it;
Premiums paid w/pre-tax dollars;
Hoping most regions will have 3-4 networks & 75% of
employees will have access to them eventually;
Retirees - under age 65, in with actives; over 65 Medigap;
Allied Signal
50,000 employees, 150,000 total enrollees;
45,000 retirees, 90,000 including their dependents;
Current retirees in indemnity plan only; new retirees will
be in P.O.S. option until 65 and then go to indemnity plan
w/Medicare's carve out. 65 much more expensive than
employees, 65 cost less than employees;
Offered indemnity plan & HMOs but costs took off;
Not self insured;
Decided on Point of Service Option national contract with
cost guaranteed by CIGNA/CIGNA also contracts as the TPA
for the HMOs now;
22,000 MDs in network and "Centers for Excellence" used
for transplants and major surgery;
Benefits in network are richer than out of network, rather
than adjusting premiums for differences in coverage, e.g.
copays are lower and vision plan and preventive well baby
care are in network only;
Cost savings were derived from:
in-patient care reduced
hospital discounts
capitating primary care physician on a pm pm basis
try to avoid
discounted fee for service arrangements
discounted PPOs/capitated IPAs;
Uses second surgical opinion, pre-admission certification
and case management;
Wellness is employer responsibility - not a perk;
Substance abuse has limitations in network and only 60%
coverage out of network;
FSA for health benefits premiums to be used as pre-tax
dollars only. (locked in for 1 year to avoid the IRS use
or lose rule);
Over 80% of employees are in the Network.
Marriott
Has always self insured;
130,00 eligible employees, very transient with low wages;
Employer had less than $1,000 per employee to spend so
affordability was big issue. No interest in cost shifting
to employees;
Employee pays 1/3, company pays 2/3;
Offers indemnity plan, numerous (80) HMOs and Point of
Service Plan with ASO contract with Prudential for first
time in 1990. 25 locations around the country have the
PSO option. No risk sharing currently with Prudential;
Pre-admission certification and large case management used
since 1985;
51% of employees are enrolled in HMOs;
Richer benefits and more plan co-pays in PSO option than
indemnity plan;
Plan to expand the PSO option in 1992;
Retiree -- rule of 75, after age and length of service
equals 75, dropped from employee program and
offered a Medicare Supplement for which they
must pay the full premium.
Philip Morris
165,000 employees;
2 Basic plus MM plans (one for salaried and one for union
employees) with Aetna and Blue Cross and HMOs with usual
80/20 co-pays and deductibles;
Self insured for 10-15 years with ASO contracts/No risk
sharing with TPAs;
No managed care other than pre-admission certification
since 1986;
Use Medstat to collect data;
Premiums on pre-tax basis, no FSA in place except for
child care;
Exercise program - no wellness data;
Same benefits plan as employees, no dental after 65,
salaried employees get Medigap policy after age 65;
HB Program costs were $18 million in 1981, will be $90
million this year;
Plans to set deductibles according to salary, start case
management, increase cost sharing on in-patient, start
mail order prescription drugs.
AT&T
Self insured -- assumes all risk -- ASO contracts for
indemnity plans;
Indemnity plans (Blue Cross and Travelers) plus HMOs (12%
enrolled)
Indemnity plans paid in full by company - no employee
premium.
Going to Point of Service Managed Care Network over next
couple of years; RFPs put out last fall.
Looking for risk sharing arrangments
Managed care not a proven product.
Current cost containment measures include pre-admission
certification, concurrent review and large case
managment. Psychiatric care and substance abuse currently
under managed care.
2nd surgical opinions did not prove to be cost effective
and were dropped this year.
Plan to cut back on HMOs (currently 250). Some have only
5-10 enrollees.
FSAs for health benefits and dependent child care, 1.1%
participation.
Pre-tax dollars for health benefits premiums.
Current retirees - same benefits as employees under age 65
with no premium paid by retirees; after 65, company pays
Medicare Part B and full cost of carve out.
XEROX
55,000 active employees and 6,000 retirees;
Xerox offers a self insured indemnity plan and
approximately 170 HMOs.
Started process of developing a network of HMOs three
years ago -- about 40% of employees are currently enrolled
in HMOs.
Formal RFPs last year and received about 9 bids for
"regional managers" for networks of HMOs -- settled on 6
regions which now offer 95 total network HMOs.
Network of HMOs is called Health/Link (HL).
HL just started in 1990 and about 55% enrolled in HL.
Demographics were about same for HMO enrollments and
indemnity plan but then again the workforce age is between
25 and 45.
If subscriber has severe mental health problem, the HMOs'
benefits are admittedly deficient and Xerox permits the
employee to transfer at any time during the year to the
indemnity plan.
Each of the six "regional network managers" has assigned a
staff person to Xerox to work with them on a daily basis.
These 6 network managers decide on merits of plans in
network, monitor quality assurance, do centralized
billings between Xerox and the plans and help during open
season.
Xerox pays the member plans' community rates -- does not
negotiate individually.
Contracts are "open ended" with rates revised annually.
Indemnity plan is self insured -- covers 25,000 people ASO
contract with Prudential -- deductibles are governed by
amount of salary, e.g. 1% of salary = deductible.
FSA for dependent child care.
plan. HMO contribution by XEROX is same as that for indemnity
Retirees (5,000 total) have 1st dollar medical plan -- no
HMO option available to them -- after age 65, retirees
have a Medicare carve-out.
Retirees have a separate plan from employees - no retiree
contribution before or after age 65. After age 65 -
company pay Part B premium, not the deductible & does pay
co-insurance for retirees.
Utilization review for mental health only -- employee
dissatisfaction too high for very little return. When
implemented this UR, they increased benefits for
outpatient. Now outpatient utilization is equally high to
avoid the inpatient pre-admission review.
No risk sharing with Psychiatric Management Review for the
mental health.
No risk sharing with Prudential for indemnity plan either.
PruTrace (data analysis) gives claims management infor-
mation.
No LTC
Wellness Programs since late Seventies -smoking cessation,
exercise, cholesterol screening, usual programs.
Advice -- Work with key players well in advance of
producing RFPs to determine what is
attainable. They will send us a copy of their
RFP.
Coors
32,000 employees -- average age 42 -- 77% in Denver/Golden
area;
Self insured, self administered Major Medical &
Catastrophic benefit plan with no employee premium - no
HMOs offered;
Mental health is only area currently under case management
and it is done by contract -- second surgical opinion in
some cases;
No real cost containment efforts otherwise;
No retiree coverage after age 65;
Primary reason we looked at Coors was their wellness
program;
Began wellness program in 1981 -- no baseline data --
didn't want employees thinking they were being
manipulated. However, based on an engineering and
computer model at University of Oregon, a 1988 study by
Coors showed that health insurance costs for participants
in the wellness programs were 13% less than non-
participants' costs at a savings of $3.2 million in 1988;
Coors encourages employees and their spouses to have
health risk appraisals done every 5 years -- covers 11
risk areas;
Coors offers cholesterol screening, body fat measurements,
treadmill screening, blood pressure and breast cancer
screening, nutrition education, stress management,
coronary risk i.d. and behavior modification, parenting
skills, weight management, a 12 week smoking cessation
program with an 85% success rate, prenatal programs,
cardiac and orthopedic rehabilitation and back care
programs;
Company sees these as a "moral obligation."
HIAA
Health Insurance Association of America
HEALTH CARE
FINANCING
FOR
ALL AMERICANS
Private Market Reform & Public Responsibility
HEALTH CARE
FINANCING
FOR
ALL AMERICANS
Private Market Reform & Public Responsibility
1991
Health Care
Financing for
All Americans:
A Synopsis
The Health Insurance Association of America
(HIAA) has formulated a proposal to provide
access to health care coverage for all Americans.
HIAA's proposal focuses on expanding cover-
age through the workplace and expanding pub-
lic coverage for the poor and the near poor. Its
essential elements follow.
Reform of the Small-
Employer Market
Reforms are needed to ensure the availability and
reliability of private health insurance in the small-
employer market. The aim of small-employer
market reforms is to assure private coverage on a
continuing basis for small employers and to assure
that individual high-risk employees are not denied
coverage. If an employer changes insurers or an
employee changes jobs, new preexisting condition
restrictions would not be imposed. Limits would
apply to variations in premiums and premium
increases.
2
Private Reinsurance
For example, the self-employed would find
coverage more affordable if, instead of receiving
A private reinsurance mechanism for the small-
a 25 percent deduction for the cost of health
employer health benefit market needs to be
benefits, they received 100 percent, as do other
authorized. This would allow insurers to imple-
employers (as long as they provide equal cover-
ment market reforms by permitting insurers to
age for their employees). Financially vulnerable
spread losses for high-risk individuals equitably
groups should receive new tax subsidies; such
across the market. Under the HIAA proposal, no
subsidies should be directed toward financially
employer would have to pay more than 150
fragile employers and low-income employed
percent of the relevant market averages for basic
individuals.
coverage.
Expanded Public Coverage
State Pools for the Medically
for the Poor and Near Poor
Uninsurable
HIAA recommends expanding Medicaid to cover
State pools for medically uninsurable individuals
all those below the federal poverty level, regard-
who are not part of an employer group need to
less of family structure, age or employment
be established. Losses should be financed by
status. Medicaid's link to welfare categorical
state general revenues or other broad-based
restrictions should be eliminated. As an impor-
funding. If a state does not act, the U.S. Depart-
tant first step, HIAA supports the recent enact-
ment of Health and Human Services (HHS)
ment of phased-in coverage for poor children.
should be authorized to set up a federally funded
The Medicaid "spend-down" program should be
pool in that state to pay for losses. The funds for
extended to all states and eligibility thresholds
the pool would come from funds that HHS
should be set to prevent impoverishment by
would otherwise spend in that state.
medical expenses.
Low-income individuals above the poverty
Affordable Coverage
level should be allowed to "buy into" an income-
related package of primary and preventive health
Insurers should be allowed to offer more afford-
care services. Also, the recent federal Medicaid
able coverage to small employer groups. Insur-
"buy-out" requirement (which eventuated from
ers should be permitted to market lower-cost
HIAA's original proposal to authorize such state
prototype plans; and insured employer plans
actions) should be implemented. States should
should receive exemptions from costly state
pay the employee share of available employer
provider and service coverage mandates (such
group insurance where the average employee's
exemptions are given to self-insured plans).
premium costs are less than what the same
benefit would cost on an average per capita
Targeted Tax Assistance
basis under direct Medicaid financing. This will
maximize state savings and avoid adverse selec-
Tax assistance must be targeted so that small
tion between the public and private sectors.
employers and their financially vulnerable em-
ployees can afford health insurance coverage.
Health Insurance Association of America
3
Cost Containment
Moving forward with cost-containment efforts to
make health care more affordable has become a
national imperative. HIAA recommends promot-
ing the development of managed care systems
(HMOs, PPOs, point-of-service plans, and the
like) that rationalize and integrate health deliv-
ery and financing; HIAA also supports such
managed care mechanisms as utilization review
and quality assurance. Government must be
encouraged to create a climate hospitable to the
growth of managed care, and to refrain from
creating barriers to utilization review and other
key cost-containment strategies.
Better methods for assessing the cost-effec-
tiveness of new technologies and procedures
are also needed, as are increased efforts to
formulate medical practice guidelines and pro-
tocols. (The latter would encourage efficiency in
physicians' practice styles.) Another way to
control costs is to provide financial incentives for
consumers, so that they will be cost-conscious
when they select health plan alternatives, health
care providers, and medical services. Efforts also
must be made to reduce the incidence of mal-
practice and to reform the malpractice system,
making it more efficient and assuring that victims
are reasonably compensated.
Health Insurance Association of America
5
Health Care
Financing for
All Americans
Introduction
Today, more than 30 million Americans have
neither public nor private health care coverage.
These Americans often have greater problems
gaining access to the health care system than do
those who have coverage. They may forgo
necessary care or delay getting treatment until
their problems worsen - and become more
costly.
These individuals represent the widening
gap in our nation's health care financing system.
HIAA believes that policy makers must devise
ways to close the gap. More precisely, govern-
ment action is needed to provide the legislative
and fiscal base that will enable a combination of
public and private providers of health care
coverage to meet the health care financing needs
of all Americans.
The HIAA proposal takes into account the
important policy implications of the relationship
between income, the workplace, and health care
coverage. The vast majority of Americans with
adequate incomes have health coverage. Ninety
percent of all nonelderly Americans with in-
6
comes of over three times the federal poverty
supports wellness and prevention activities, as
level have some form of coverage. Approxi-
well as economic incentives for the consumer to
mately 150 million nonelderly in this country
be "cost conscious" in the use of medical re-
obtain health coverage through an employment-
sources and in choosing a health plan.
based plan.
Yet most individuals without health care
Proposal
coverage are in families with some involvement
in the work force. In fact, 66 percent of the
uninsured are full-time workers or are depen-
Reform of the Small-Employer Market
dents of full-time workers. Another 14 percent
Those who are concerned with assuring the avail-
either work half-time (18 to 34 hours a week) or
ability and reliability of health insurance coverage
belong to families with one or more part-time
are paying increasing attention to the small-em-
working members. (Current Population Survey,
ployer health benefit market. This is largely be-
U.S. Dept. of Health and Human Services, March
cause a high proportion of workers without health
1988 tabulations.)
care coverage - fully two-thirds - work for a
Efforts to make coverage more available and
business establishment with 25 or fewer employ-
more affordable should take into account the
ees at that establishment's location; but only one in
fact that most Americans receive their health care
three firms with fewer than 10 employees offers
coverage through employment. A realistic ap-
health benefits. (Figures 1 and 2.)
proach is to focus on improving the ability of
Increasingly, small employers seek relief from
financially vulnerable employers to offer health
rising health care costs by an aggressive search
insurance to their often low-income employees.
for the lowest possible price for health care
In addition, low-income employees need direct
coverage. Those with healthy employees are
government assistance SO that they can afford
more likely to seek, and to obtain, coverage at
their share of premiums.
prices that reflect their low risk.
To be cost effective, expansion strategies
In turn, more and more insurers have found
should build on existing coverage and target
that to be price competitive for these low risk
public coverage to the poor and near poor.
employers, they are less able to spread the costs
Extending public coverage to higher income
of groups with employees at high risk of incur-
individuals will lead inevitably to unnecessary
ring large medical expenses broadly across the
tax increases to support substitution of public
lower risk groups. This has led to a growing
coverage for private coverage.
number of higher risk employers that cannot
HIAA also believes that efforts to expand the
find coverage at an affordable price. Moreover,
nation's health care financing system must be
those employer groups that are at lower risk
complemented by responsible cost-containment
today, and thus initially obtain a lower premium,
measures. HIAA's policy on cost containment
are likely to have employees who will develop
includes an emphasis on the development of
expensive medical conditions. Those employers
managed health care systems. It also calls for
may then face large premium increases.
greater scrutiny of one of the major causes of
In general, then, small employers have greater
high costs - the use of new, often unproven,
difficulty than large employers in affording and
technologies and procedures. HIAA also strongly
sometimes even obtaining health coverage. Fur-
Health Insurance Association of America
7
Workers Who Have Employer-Based Coverage,
Workers without Employer-Based Coverage,
by Establishment Size
by Establishment Size
10-25
Under 10
17%
44%
(13.4m)
(6.2m)
Under 10
19%
(15.3m)
26-100
24%
(18.9m)
Over 500
10-25
7%
22%
(3.1m)
(0.93m)
Over 500
101-500
19%
9%
(15.3m)
101-500
(1.3m)
21%
26-100
(16.9m)
19%
(2.7m)
Source: 1987 National Medical Expenditure Survey
Source: 1987 National Medical Expenditure Survey
(Because of rounding, numbers do not add up to 100%)
Figure 1
Figure 2
thermore, the greater frequency with which
up subsidizing older, higher income workers.
small employers change carriers and their work-
Subsidies could occur on a regional scale, too,
ers change jobs exposes these individuals to
because some community rating schemes fail to
greater risk of being left out of the system.
permit rate adjustment by geographic area: these
Finally, small employers are highly sensitive to
would force lower cost, more efficient and often
very large, unanticipated premium increases
lower-income localities to subsidize higher cost,
and may fail to obtain, or to retain, coverage in
less efficient localities that often have higher per
a marketplace where individual employer expe-
capita incomes. Community rating gives carriers
rience is highly unpredictable.
little if any latitude to fine-tune their rates,
Substantial reforms are needed if health in-
thereby increasing the risk of insolvency.
surers are to serve the broader interests of small
There are far better avenues to reforming the
employers and their employees. Many recom-
small-employer health benefits market than com-
mendations are under discussion. But not all are
munity rating schemes. The best approach is a
of equal value.
multi-faceted blend of private and public strate-
One ill-advised proposal is to institute a flat
gies that take into account the complexity and
"community rate" for all small employers. This
realities of health care financing. Accordingly,
would increase rates for the populations least
HIAA has developed a comprehensive set of
able to pay, and younger workers (who on
legislative reforms that can be implemented
average earn less than older workers) would end
while allowing a viable private marketplace.
8
HIAA recommends market reforms and
could vary for groups similar in geography,
reinsurance mechanisms to ensure fair access to,
demographic composition and plan design.
and continuity of coverage for, small employers
and their employees. When enacted by the
More specifically, a carrier's premiums for
states, these reforms will introduce a greater
similar groups could not vary by more than 35
degree of predictability and stability to the small-
percent from the carrier's midpoint rate (halfway
employer health benefit marketplace.
between the lowest and highest rate). There
would also be a 15 percent limitation on how
Guaranteed Availability. All small-employer
much a carrier could vary rates by industry.
groups would be able to obtain private health
Finally, carriers would have to limit a group's
insurance regardless of the health risk they
year-to-year premium increases to no more than
present. A significant number of carriers in a
15 percent above the carrier's "trend" (the year-
state (defined by their small-employer mar-
to-year increase in the lowest new business
ket share) would be required to guarantee to
rate). Separate "trends" should be allowed for
issue health care coverage to any legitimate
managed care and non-managed care to reflect
small-employer group. HIAA is willing to
health care cost/efficiency differences in these
consider variations on this approach (in a
structures.
given state) to enhance consumer choice.
In order for these reforms to succeed, the
implementing legislation will have to pertain to
Coverage of Whole Groups. Coverage would
all competitors in the small-employer market. If
be made available to entire employer groups;
any one company or segment of the market
no small employer nor any insurer would be
pursues such reforms independently, without
able to exclude from the group's coverage
rules for marketplace behavior spelled out in
individuals who present high medical risks.
legislation, it might invite financial ruin. It is
therefore important that states have the clear
Renewability of Coverage. At renewal time,
authority to impose these rules on all competi-
employer groups and/or individuals in these
tors in the small-employer marketplace. Within
groups would be assured that their coverage
the scope of these rules, insurers would be
would not be canceled because of deteriorat-
allowed to use individual risk assessment and
ing health.
classification initially to assess risk, to set rates,
and to determine for which individuals to pur-
Continuity of Coverage. Once a person is
chase reinsurance.
covered in the employer market and has
satisfied an initial plan's preexisting condi-
Private Reinsurance
tion restrictions, he or she would not have to
A private marketwide reinsurance system would
meet those requirements again when chang-
make possible the reform of the small-employer
ing jobs or when the employer changes
market. Reinsurance means to "insure again."
carriers.
Under reinsurance, an insurance company, called
the ceding or direct-writing insurer, purchases
Premium Pricing Limits. Insurance carriers
insurance from the reinsurer to cover all or part
would be required to limit how much their rates
of the loss against which it protects its policy-
Health Insurance Association of America
9
holder. The reinsurer is, in a sense, a silent
ing reinsurance losses to unacceptable levels.)
partner of the original insurer. Reinsurance en-
Nonguaranteed issue carriers would be permit-
ables an insurer to accept a greater variety of
ted only to reinsure new entrants to existing
risks. By sharing these risks with a reinsurer, the
groups through individual reinsurance. This
ceding insurer obtains an adequate spread within
reflects the fact that under the "whole group"
which the law of averages can operate.
rule, all carriers would have to make coverage
Reinsurance will allow individual insurers (or
available to any new employees entering a
other small-employer health plan entities) to
group they already insure.
implement reforms without facing high financial
The reinsurer would cover the costs associ-
losses. Reinsurance will allow carriers to assure
ated with reinsured cases. The process of rein-
small-employer groups presenting a high health
surance is invisible to employers and employees
risk access to a basic set of benefits at a rate no
and is purely a transaction between the ceding
higher than 50 percent above the applicable
insurer and the reinsurer.
average market premium. For groups already
In the aggregate, the cost of reinsured per-
covered by an insurance carrier, the premium
sons will exceed the reinsurance premiums; this
pricing limits described above would pertain,
is because reinsurance would be aimed at em-
and would in many cases limit a high-risk
ployer groups and employees known to be high
employer's rates to a level below the guaranteed
risk, and because the premium price would be
marketwide maximum level of 50 percent above
limited in order to encourage carriers to accept
average.
high risk applicants. Under this proposal, the
Under this approach, a significant number of
reinsurer's losses would be spread equitably
carriers in a state's small-employee health ben-
across all competitors in the private marketplace
efit market (defined by small-employer pre-
both the guaranteed issue and nonguaranteed
mium) would be required to guarantee to issue
issue carriers.
health coverage to any legitimate small-em-
Losses would be covered first through contri-
ployer group applicant. Not all carriers would be
butions from all carriers in the small-employer
required to guarantee to issue coverage, but they
market. If losses were significantly higher than
would be strongly encouraged to do SO through
expected, a second "safety valve" of broad-
better reinsurance terms for guaranteed issue
based financing would be made available.
carriers. Guaranteed issue carriers could reinsure
HIAA will aggressively pursue reinsurance
entire high-risk small-employer groups at a
and related small-employer market reform at the
reinsurance premium price of 150 percent of
state level. HIAA will also recommend federal
average market costs or reinsure high-risk indi-
legislation to give states the authority, where
viduals within groups at 500 percent of average
necessary, to assure compliance with the market
market costs. (Individual reinsurance would
reforms outlined here and to finance the
include a $5,000 deductible.)
reinsurance system.
To reduce the volume of reinsured claims,
With HIAA's recommended market changes
reinsurance would be on a three-year basis. (If
in place, the small employer will stand to benefit
reinsurance were permitted annually, carriers
greatly from the rapidly evolving cost-manage-
could declare more groups or individuals high-
ment capacity. These reforms will encourage
risk and utilize reinsurance more often, increas-
competition based more on efficiency and less
10
on selection. Competitors would no longer be
One reason that mandated benefit laws in-
allowed to draw business away from more
crease the cost of coverage is that multi-state
efficient health benefit plans by offering tempo-
insurers must monitor and comply with SO many
rarily low prices that rise sharply once an em-
different state rules and regulations. Insurers are
ployee gets sick. Insurers that reduce inefficient
precluded from developing lower-cost proto-
operating expenses and that offer cost-effective
type plans that would be marketable across state
financing systems and delivery systems will gain
lines. Instead, they are often forced to offer only
a larger share of what is an extremely price-
"Cadillac" plans based on a multitude of man-
sensitive market.
dates from many states.
Many of these benefits, are expensive in their
State Pools for Uninsurable Individuals
own right. Taken together, mandated benefits in
Even with increased employer-based coverage
many states provide a package that many small
and with Medicaid expansions (see below),
employers simply cannot afford.
medically uninsurable individuals who are not
A 1989 study (conducted by Gail Jensen, then
part of an insured employer group would remain
a health care economist with the University of
without coverage. High-risk pools should be
Illinois, and now at the University of North Caro-
established in the states SO that coverage would
lina) concluded that 16 percent of small employers
become available to such individuals. Pool losses
not now providing health insurance would offer
should be funded by general revenues or similar
benefits in the absence of state mandates.
sources, which spread the cost broadly across
State-mandated benefit laws do not apply
society. (As of December 1990, 25 states had
equally to all employer-sponsored health plans.
enacted broad-based pools for uninsurable indi-
The Employee Retirement Income Security Act
viduals.)
of 1974 (ERISA) exempts self-insured plans from
state mandated benefit laws and other forms of
Allow Insurers to Offer More
state insurance regulations. In general, only
Affordable Benefit Plans to Small-
large employers have the financial resources or
Employer Groups
the risk-spreading base to self-insure; self-insur-
Over the years, the list of state laws mandating
ance allows multi-state employers not only to
benefits and providers has grown dramatically.
save administrative costs through plan unifor-
There are about 800 such laws nationwide -
mity but to pick and choose those benefits that
and they mandate coverage of such disparate
are most desirable and cost effective. Employers
services and provider categories as chiropractic
too small to self-insure do not have this flexibility,
and podiatry, acupuncture, expansive inpatient
and they are thus less likely to offer health
mental health services (even where most cost
insurance at all.
effective alternatives exist), in vitro fertilization,
In 1985, the U.S. Supreme Court ruled that to
and pastoral counseling. The cumulative effect
put employee health benefit plans on the same
of this hodgepodge of state laws is to increase
footing as self-insured plans required congres-
the cost of health insurance, particularly for
sional action. Moreover, in recent years, there
small employers who are most in need of
also has been a proliferation of state actions that
affordable basic benefits and who are too small
obstruct or hinder private-sector managed care
to self-insure and thus escape these mandates as
efforts that would make health care coverage
larger employers often do.
more affordable. These state bills are aimed at
Health Insurance Association of America
11
limiting contractual arrangements with cost-ef-
Percentage of Uninsured Workers
fective provider networks, as well as preventing
Who Are Self-Employed
or limiting insurers' ability to carry out effective
utilization review programs. Again, small em-
ployers should be able to benefit from the same
Self-Employed
13.6%
cost-management approaches as do larger em-
ployers.
Targeted Tax Assistance for Small
Employers and Their Financially
Vulnerable Employees
Small businesses tend to be younger, financially
Non-Self-Employed
86.4%
less stable and employ a lower wage work force.
Thus, health benefits often represent a greater
Source: EBRI Tabulations of March 1990 Current
financial burden to small businesses, who are far
Population Survey
less likely to offer them than are other employers.
A 1989 HIAA survey found that only 27 percent
Figure 3
of firms with fewer than 10 employees offer
health benefits. Conversely, over 90 percent of
firms with more than 25 employees offer health
benefits. (Figures 3 and 4.)
Percentage of Firms That Offer Health
Benefits by Number of Employees
Eleven percent of uninsured workers are self-
employed. They are uninsured in part because
self-employed workers receive only a 25 percent
income tax deduction for the cost of health
99%
benefits. Other (incorporated) businesses re-
100
89%
85%
ceive a full 100 percent deduction.
80
73%
The financial vulnerability of small employers
60
and uninsured workers, as well as government
fiscal realities, suggest that additional tax assis-
40
27%
tance should be carefully targeted to those popu-
20
lations most in need. For instance, government
0
should direct new tax subsidies to assist employ-
1-9
10-24
25-49
50-99
100+
Number of Employees
ers and individuals with inadequate financial
resources in purchasing private coverage. Sliding
scale subsidies should be targeted, for example,
Source: HIAA Employer Survey, 1990
to small employers paying average wages of less
than $18,000 annually. The subsidy rate for such
Figure 4
employers should increase as the percent of total
payroll going to hospital and medical benefits
increases. A temporarily higher subsidy could be
given to firms offering benefits for the first time.
12
times the federal poverty level. (Figure 5.) The
Persons without Health Care Coverage
current federal/state Medicaid program covers
by Family Income
only four out of ten poor Americans. Many states
as a Percentage of Poverty
do not have a medically needy program, and
Medicaid income eligibility thresholds for the
100%-149%
nonelderly generally fall far below the poverty
Below Poverty
of poverty
28.6%
level.
17.8%
Because the poor and many of the near poor
do not have the means to purchase coverage on
their own, the health care financing responsibil-
150% -199%
of poverty
ity for these populations rests largely with the
14%
government.
200% or more
HIAA proposes that the Medicaid program be
of poverty
39.6%
extended to cover all poor Americans regardless
of age, family structure or employment status. To
carry out this recommendation fully, Medicaid
Source: EBRI Tabulations of the March 1990 Current
eligibility will have to be independent of such
Population Survey
cash assistance programs as Aid to Families with
Dependent Children (AFDC). Moreover, fiscal
Figure 5
constraints suggest first priority should be phas-
Subsidies should be targeted to low-income
ing in coverage to all poor children under age 18.
individuals and families. A refundable tax credit
For poor workers who have access to employer-
equaling 50 percent of the employee share of
based private coverage, HIAA supports appro-
premium cost could be made available for
priate state implementation of recent federal
taxpayers at or below the poverty level. Above
legislation on a "buy-out" of employed individu-
poverty, the percentage credit would decrease
als and their families from the Medicaid pro-
as income rises and phase out completely at
gram. States should pay the poor employees'
twice poverty. Advance payment of the tax
premium contributions and cost sharing (co-
credit through the employer should be made for
pays and deductibles) associated with available
employees with little or no income tax liability;
employer plans when Medicaid outlays would
and, government should extend to the self-
be reduced on an average per capita basis. This
employed the 100 percent tax deduction en-
will help ease individuals' transition into economic
joyed by other employers (as long as they
self-reliance and often improve access to medical
provide equal coverage for their employees, if
care.
they have any).
Near-poor individuals who have family in-
comes between one and one-and-a-half times the
Expand Public Coverage for the Poor
federal poverty level should be allowed to "buy
and Near Poor
into" a package of primary and preventive care
Close to 29 percent of the uninsured have family
services only. Premiums would be based on a
incomes below the federal poverty level ($10,560
sliding scale related to their income. This would
for a family of three in 1990). Another 18 percent
target government assistance to the primary and
have incomes between one and one-and-a-half
preventive services the near poor most often forgo
Health Insurance Association of America
13
and for which employer-sponsored plans' cost-
the cost of treatment, it is imperative to make
sharing sometimes presents a financial obstacle.
sure that patients get care from physicians (and
To assure that no American falls beneath the
other providers) who use resources efficiently.
poverty level as a consequence of medical
Managed care systems build on that premise by
expenses, all states should deduct medical ex-
selecting panels of providers for their networks
penses from income when determining eligibil-
who meet specified criteria and who agree to be
ity for Medicaid. "Medically needy" or "spend-
monitored to assure that they continue to pro-
down" programs (and many states have already
vide high-quality cost-effective care. Patients are
adopted such programs) constitute a last-resort
then given financial incentives to choose these
financial safety net covering a full range of health
providers as their caregivers. By integrating the
services.
financing and delivery of care, managed care
Raising eligibility standards for Medicaid to
improves quality while constraining costs.
100 percent of the federal poverty level will give
A second major element in effective cost
an estimated 9.5 million to 11 million uninsured
containment must be improved knowledge about
Americans access to Medicaid coverage. (The
what constitutes cost-effective care. New tech-
Medicaid program currently pays for the care of
nologies that promise better care are introduced
over 21 million people annually.) These reforms
into medical practice, often at great cost, before
would increase Medicaid costs by only about 25
anyone has made a careful assessment of their
percent while increasing the population served
cost-effectiveness or even appropriateness for
by the program by about 70 percent. This is
certain treatments. Insurers, government, and all
because three-quarters of Medicaid spending
who pay for medical services have a stake in
now goes for long-term care and other services
developing better mechanisms and procedures
for the elderly and disabled. Medicaid coverage
for that assessment.
for poor uninsured populations is far less expen-
Related to the need for better knowledge
sive on a per capita basis.
about technologies is the need for better infor-
mation about what constitutes good medical
Contain Health Care Costs
practice. (One symptom of this need is that in
Efforts to improve access will be thwarted, at
many areas of medicine there is broad variation
least to some extent, if no way is found to curb
in the treatment of patients with similar condi-
the escalation of health care costs. As the cost of
tions.) Increased efforts should be directed to
care continues to rise, employers who are on the
filling the knowledge gap by establishing
margin with respect to decisions to offer cover-
mechanisms and financing to develop medical
age will find coverage unaffordable. Solving the
practice guidelines and protocols that define the
cost problem is a prerequisite to solving the
range of acceptable medical practice for particu-
access problem.
lar conditions. This task will require a substantial
Although there are no simple solutions to the
commitment of resources from both govern-
cost problem, a key component of any effective
ment and the private sector. These kinds of
cost containment strategy is the further develop-
advances in medical knowledge will help to
ment of managed care systems that integrate
improve utilization review activities by provid-
financing and delivery - HMOs, PPOs, point-
ing standards that are accepted by both physi-
of-service plans, and the like. Since physicians
cians and, very likely, the courts as well.
make most of the key decisions that determine
Government has a vital role to play in the
14
battle against cost escalation, particularly with
respect to technology assessment, protocol de-
velopment, and the collection and analysis of
data that can be used to develop more accurate
measures of cost, use, and medical outcomes.
Also necessary is a legal climate that is hospi-
table to the growth of managed care. Govern-
ment should refrain from limiting insurers' abil-
ity to employ appropriate utilization review
techniques and should not outlaw managed care
plans that require patients to pay significantly
more when they opt to get care from non-
network providers (thus generating significantly
higher costs).
Government can help reduce administrative
costs by cooperating with industry-wide efforts
to utilize common claims forms and expand
electronic collection, analysis, and payment of
claims. Finally, government has to take the lead
in malpractice reform. Such reform includes
reducing the incidence of malpractice by en-
couraging better risk management activities by
providers, taking steps to assure that only com-
petent providers treat patients, and making
legislative changes in the malpractice system SO
that awards are appropriate and adjudication
does not absorb an excessive percentage of the
costs of righting the wrongs done to patients.
HIAA
Health Insurance Association of America
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036-3998
PP191
A REPORT ON
THE ATTITUDES OF
FORTUNE 1000
SENIOR LEVEL EXECUTIVES
TOWARD
THE HEALTH CARE COST CRISIS
CONDUCTED FOR:
THE HEALTH INSURANCE ASSOCIATION OF AMERICA
JANUARY 1990
BY
THE ROPER ORGANIZATION INC.
205 EAST FORTY SECOND STREET
NEW YORK
The Roper Organization Inc.
205 East 42nd Street
New York, NY 10017
January 1990
Respondent:
CEO
25%
COO
7%
CFO
39%
Other senior exec.
29%
Good morning/afternoon. My name is
and I'm working on a
survey of Chief Executive Officers of America's largest industrial and
service companies that is being conducted by The Roper Organization in New
York City.
The survey is concerned with cost pressures affecting American business these
days. The interview will take only about 10 minutes, and your individual
responses will be kept completely confidential.
la. Which four or five factors would you say are having the most adverse
effect on the prosperity of our nation these days?
Respondents answering = 100
Federal budget deficit
57%
U.S. educational system/
no qualified workers/
low quality of staff performance
26%
Health care costs
mentioned (net)
25%
Cost of capital/
high interest rates
25%
Foreign competition
22%
Trade deficit
20%
Drugs/crime
17%
Inflation
15%
Slowdown of economy/
growth/industry
12%
Productivity/
low productivity
12%
Competition (general)
(not foreign)
9%
Lack of savings/
high consumer debt/
spending
9%
Rising costs/
high operating costs
(high overhead)
8%
Health care costs
(2nd mention)
8%
Taxes/tax rates
8%
Government incompetence/
out of touch gov't/
inability of gov't
to make decisions
7%
Health care costs
(4th mention)
6%
Too many government regulations/
high cost of gov't regulation
6%
Health care costs
(1st mention)
5%
Short term attitudes/
outlook of business
4%
Health care costs
(3rd mention)
4%
Hostile takeovers/
buy outs
3%
High cost of litigation
3%
Quality/quality control
3%
Health care costs
(5th mention)
2%
All other mentions
30%
lb. Which four or five factors are having the most adverse effect on the
prosperity of American business today?
Respondents answering = 100
Federal budget deficit
49%
Foreign competition
33%
Cost of capital/
high interest rates
27%
U.S. educational system/
no qualified workers/
low quality of staff
performance
25%
Health care costs
mentioned (net)
24%
Trade deficit
15%
Too many government regulations/
high cost of gov't regulation
14%
Inflation
13%
Rising costs/
high operating costs
(high overhead)
12%
Slowdown of economy/
growth/industry
12%
Productivity/
low productivity
10%
Drugs/crime
9%
Health care costs
(1st mention)
7%
Health care costs
(2nd mention)
7%
Government incompetence/
out of touch gov't/
inability of gov't
to make decisions
7%
Lack of savings/
high consumer debt/
spending
6%
Taxes/tax rates
6%
Health care costs
(4th mention)
5%
Competition (general)
(not foreign)
4%
High cost of litigation
4%
Quality/quality control
4%
Health care costs
(5th mention)
3%
Short term attitudes/
outlook of business
2%
Hostile takeovers/
buy outs
2%
Health care costs
(3rd mention)
2%
Employee benefit/
entitlement costs
1%
Reduced consumer confidence in products
1%
All other mentions
31%
None
1%
2
lc. Which four or five factors are having the most adverse effect on your
corporation's financial status today?
Respondents answering = 100
Cost of capital/
High interest cates
32%
Rising costs/
high operating costs
(high overhead)
31%
Federal budget deficit
23%
Slowdown of economy/
growth/industry
21%
Health care costs mentioned (net)
19%
Too many government regulations/
high cost of gov't regulation
17%
Foreign competition
16%
Competition (general)
(not foreign)
15%
U.S. educational system/
no qualified workers/
low quality of staff
performance
12%
Trade deficit
12%
Health care costs
(1st mention)
8%
Inflation
8%
Government incompetence/
out of touch gov't/
inability of gov't
to make decisions
8%
Lack of savings/
high consumer debt/spending
5%
Employee benefit/
entitlement costs
5%
Health care costs (2nd mention)
4%
Productivity/low productivity
4%
High cost of litigation
4%
Health care costs (4th mention)
4%
Health care costs (3rd mention)
3%
Quality/quality control
3%
Taxes/tax rates
3%
Deregulation
2%
Drugs/crime
1%
High cost of injury settlements
1%
All other mentions
28%
None
4%
3
2. Would you say health care costs are a major problem for your corporation
these days, or a minor problem, or not really a problem?
Respondents answering = 100
Major problem
65% (ASK 3)
Minor problem
31%
(SKIP TO 4)
Not really a problem
4%
(SKIP TO 6)
Don't know
-%
(SKIP TO 6)
3. Could you please elaborate on why you say health care costs are a major
problem for your corporation? PROBE: Anything else?
Asked of and based on respondents for whom health care costs are a major problem
Respondents answering = 100
Health care costs rising
faster than other costs/
cost must be controlled
48%
Costs are rising
45%
Problem with retirees
8%
Need a way of assessing
cost effectiveness/
worth of services
5%
Rising costs make
us less internationally
competitive
2%
National competitiveness
hurt by difficulty
of managing expenses
2%
Lack of patient management/
monitoring of patient care/
no one to oversee/
no centralization
2%
Other mentions
6%
None
2%
4. Where would you rank health care costs among the factors that adversely
affect your corporation's financial status? Would you say they
are
(READ LIST)
Asked of and based on respondents for whom health care costs are a problem
Respondents answering = 96
The number one problem
3%
One of the top three
11%
One of the top five
33%
A significant, but not
critical problem, or
51%
Not really a problem
1%
(DON'T READ)
Don't Know
-%
5. Do you view the issue of health care costs as a lot more important to your
corporation than two or three years ago, or just about the same now as
then?
Asked of and based on respondents for whom health care costs are a problem
Respondents answering = 96
A lot more important
71%
Just about the same
28%
Don't know
1%
6. As employers' difficulties with health benefit programs have grown, has
your interest in some sort of universal national health insurance plan
increased?
Respondents answering = 100
Yes
32%
No
64%
Don't know
4%
4
7. Which of these statements comes closest to describing how you feel about
the portion of health care costs your employees bear--that is the level of
cost sharing between the corporation and the employee?
Respondents answering = 100
a. The level of cost sharing should be increased
substantially to make employees more cost conscious
27%
b. The level of cost sharing should be increased slightly 36%
C. The level of cost sharing is just about right
27%
d. The level of cost sharing is slightly higher than
it ought to be
6%
e. The level of cost sharing is substantially too high
2%
Don't know
2%
8. In the last 2 or 3 years, have you made any major changes in your
corporation's health benefit plan specifically targeted at containing
costs, such as raising deductibles, utilization controls, reducing
benefits, or switching to HMO's or PPO's?
Respondents answering = 100
Yes
89% (ASK 9)
No
10% (SKIP TO 10)
Don't know
1% (SKIP TO 10)
9. Please tell me specifically what kinds of changes have you made? PROBE:
Any other changes?
Asked of and based on respondents who made major changes in their health benefit plan targeted at
containing costs
Respondents answering = 89
Increased cost
to employee (net)
74%
Increased employee cost-sharing
(including both deductible
& co-payments)
60%
Increased employee
cost sharing (nfi)
20%
Increased employee share
of premium/employee pays
more or all for dependents
7%
Moved to managed care
care (HMO's, PPO's,
provider panels)
62%
Increased utilization review
30%
Reduced benefits/eliminated
part of benefit plan
27%
Offered flexible benefits/
cafeteria style program
11%
More effective control of
administrative costs/
self insurance/hire TPA
(third party administrator)
3%
Employee education
1%
Reimburse doctors,
hospitals, other providers
based on negotiated rates/
fee and discount rates
1%
Provide incentives
for out-patient care
1%
Doing a better audit
of claim payments
1%
Other mentions
7%
5
10. How successful would you rate your efforts to curb wasteful or excessive
use of health services by your employees? Have your efforts been
...
(READ LIST)
Respondents answering = 100
Very successful
7%
Somewhat successful
66%
Not too successful, or
20%
Not at all successful?
1%
(DON'T READ) Don't know
6%
11. Have increases in health care costs had a substantial adverse effect on
your employees' finances or standard of living, or a minor effect, or no
real effect at all?
Respondents answering = 100
Substantial adverse effect
8%
Minor effect
62%
No real effect
28%
Don't know
2%
12. Now I'm going to ask you a question about HMOs, PPOs, and similar models
that use networks of providers to manage care. Do you think HMOs, PPOs
and similar models of delivery are effective or not effective in
controlling costs?
Respondents answering = 100
Effective
48% (SKIP TO 15)
Not effective
34% (ASK 13)
Don't know
18% (SKIP TO 15)
13. Do you think this provider network approach could be effective if
appropriate changes were made, or is there no way for it to be effective
in controlling costs?
Asked of and based on respondents who think networks of providers are not effective in controlling
costs
Respondents answering = 34
Could be effective
59% (ASK 14)
No way for it to be effective 24% (SKIP TO 15)
Don't know
18% (SKIP TO 15)
6
14. What changes do you think are needed in order for provider networks--
that is HMOs and PPOs--to be effective in controlling costs?
Asked of and based on respondents who think provider network approach could be effective if
appropriate changes were made
Respondents answering = 20
Control doctor's costs
10%
Make HMO's and PPO's
designed to be more
attractive/appeal
to more people
10%
Better access to
physicians and other
providers/need more
doctors
10%
Increased employee
cost-sharing
5%
Less government regulation
5%
People should be
educated on prevention
5%
Better control
over utilization/
better monitoring
over use
5%
Make HMO's and PPO's
mandatory for all employees
5%
Other mentions
30%
None
5%
Don't know
20%
15. I'm going to read you three possible solutions to the health care cost
problem that involve varying degrees of public and private-sector
involvement. Please tell me which one you would choose as the right mix
of public and private-sector responsibilities?
Respondents answering = 100
a. Primary reliance upon improved private-sector
efforts to contain health care costs, with only
the current level of government regulation, or
62%
b. Improved private-sector cost control measures along
with increased reliance on government for cost control
such as regulation of physician and hospital prices,
or
31%
C. State or national health insurance where government
is responsible for containing costs through top
down budget controls and other measures
4%
Don't know
3%
7
16. I'm now going to read you six possible approaches to reducing health care
costs. After I read each one, please tell me if you think it is a good
solution or a bad solution? First, (read item). (ASK ABOUT EACH)
Respondents answering = 100
GOOD
BAD
SOLU-
SOLU-
DON'T
TION
TION
KNOW
a. Have employees pay a larger share of
their health care costs
72%
25%
3%
b. Reduce unnecessary use of services
through prior approval or other
utilization review mechanisms
85%
13%
2%
C. Increase physician and hospital
efficiency by applying guidelines and
standards for good medical practices
and the cost effective use of
expensive technologies
85%
9%
6%
d. Utilize networks of efficient providers,
and give patients incentives to use these
providers, such as HMOs and PPOs
77%
11%
12%
e. Place government limits on all health
care providers' prices
15%
75%
10%
f. Adopt a national or state health
plan with government control of the
total health care budget
5%
94%
1%
IF GOOD SOLUTION IN ITEM F OF Q.16, ASK Q.17. OTHERWISE SKIP TO Q.18.
17. Is a national or state health plan something that American business
for? should lobby for, or something that American business should not lobby
Asked of and based on respondents for think adopting a national or state health plan is a good solution
Respondents answering = 5
Should lobby for
3 respondents
Should not lobby for
2
respondents
Don't know
none
18. In percentage terms, how much have your corporation's health care costs
risen in the past year--less than 10%, or between 11 and 20%, between 21
and 30%, between 31 and 40%, over 40%, or have they actually gone down?
Respondents answering = 100
Less than 10%
12%
Between 11 and 20%
66%
Between 21 and 30%
17%
Between 31 and 40%
3%
Over 40%
1%
Actually gone down
-8
Don't know
1%
19. Approximately what percentage of your corporation's operating expenses
were health care costs in 1989--less than 48, or between 4 and 68,
between 7 and 9%, between 10 and 12%, between 13 and 15%, or over 15%?
Respondents answering = 100
Less than 4%
38%
Between 4 and 6%
34%
Between 7 and 9%
8%
Between 10 and 12%
2%
Between 13 and 15%
1%
Over 15%
-%
Don't know
17%
8
20. Does the person responsible for overseeing your corporation's health
benefits policy report directly to the Chief Executive Officer?
Respondents answering = 100
.
Yes
56%
No
44%
Don't know
-&
do
21. Is there anything else you would like to say on the subject of health
care costs?
Respondents answering = 100
Need stability
on costs/premiums
18%
Serious situation/
something must be done
12%
No government
interference/government
should not be involved
9%
More efficient networks
4%
Employees don't
recognize costs
2%
Other mentions
13%
Nothing else
54%
9
HOLD FOR RELEASE UNTIL:
CONTACT: Don White
Monday, March 26, 1990
HIAA
202/223-7782
Health Insurance Association of America
NEWS RELEASE
FORTUNE 1000 SENIOR EXECUTIVES OVERWHELMINGLY OPPOSE
NATIONAL HEALTH INSURANCE
WASHINGTON, D.C., March 26 -- Ninety-four percent of the
nation's leading executives oppose national health insurance as a
solution for the country's escalating health care financing
crisis, according to a survey released today by the Health
Insurance Association of America (HIAA).
The survey -- conducted by the Roper Organization Inc. --
also shows that the nation's senior executives are confident of
their ability to control their own health costs. More than two-
thirds (68 percent) believe that managing health costs through
networks such as health maintenance organizations and preferred
provider organizations is -- or could be -- effective.
"Those who contend that a nationalized health system has the
support of business and is thus inevitable need to look again,"
said Carl J. Schramm, president of HIAA.
"This survey shows clearly that the U.S. business community
believes national health insurance is bad medicine for our
- more -
1025 Connecticut Avenue, NW Washington, DC 20036-3998 202/223-7783
nation's health care financing ills," observed Schramm.
"Furthermore, given its sky-high cost, national health insurance
would be a big, expensive pill to swallow."
Added Schramm, "These leaders of American commerce are posing
the questions government commissions and other policymakers face:
does the nation need and can it afford yet another costly
entitlement program when deficits seem out of control and we have
failed to provide medical care coverage for even our poorest
citizens?"
Other survey findings include:
Health care costs were cited by the executives polled
(in response to an open-ended question) as one of the
five leading factors adversely affecting the prosperity
of American business.
Sixty-six percent of the executives polled said that
their corporate health care costs have, in the last
year, risen by 11 percent to 20 percent. Seventeen
percent said their corporate health care costs have
risen by 21 percent to 30 percent.
Eighty-five percent of the executives polled believed
reducing unnecessary use of services (through prior
approval or other utilization review methods and
increasing physician and hospital efficiency by applying
guidelines and standards for good medical practice) and
using technology assessment are good solutions to
cutting health care costs.
Eighty-nine percent of the executives polled have made
changes in their corporate health plans targeted at
containing costs.
"Corporate America believes a private sector-public sector
approach is the most practical, cost-effective method of providing
access to health care and solving our nation's soaring health care
costs," said Schramm.
- more -
"More than 60 percent of the executives responding to the
survey indicated that the private sector should take
responsibility for solving their health care financing crisis,
while more than 30 percent support a private sector approach with
some government involvement," noted Schramm.
The HIAA survey findings are based upon 100 interviews
conducted by the Roper Organization in January 1990 with chief
executive officers, chief operating officers, chief financial
officers, and other senior executives from Fortune 500 and Service
500 companies. To prevent biasing the sample, the executives were
informed only that the survey addressed "cost pressures affecting
American business."
HIAA is a trade association of 320 commercial insurance
carriers that provide health insurance for approximately
95 million Americans.
###
HIAA
Health Insurance Association of America
SUMMARY OF FINDINGS
The senior executives of major U.S. companies overwhelmingly
oppose a national health insurance plan as a solution to the
nation's health care cost problem. Ninety-four percent of the
senior executives surveyed believe national health insurance would
be a bad solution, while only 5 percent view it as a good
solution. This is indicative of the general lack of enthusiasm
these top level executives show for exclusively government
solutions to the health care cost problem, even though they
believe health care costs are a serious problem.
These findings are from a survey of senior executives
conducted by the Roper Organization in January of this year. One
hundred interviews were conducted with chief executive officers
(25 percent), chief operating officers (7 percent), chief
financial officers (39 percent), and other senior executives (29
percent) from Fortune Industrial 500 and Service 500 companies.
In order to get an unbiased sample, the executives were informed
only that the survey addressed "cost pressures affecting American
business." The survey addressed topics including the importance
of health care costs and judgments about the effectiveness of
managed care in containing costs, as well as the level of support
for a private versus a public solution to the cost problem.
1025 Connecticut Avenue, NW Washington, DC 20036-3998 202/223-7780 Telecopier 202/223-7897
When asked what mix of public and private sector involvement
they desire in a solution to the health care cost problem,
business leaders clearly want the private sector to take the lead
in health care cost containment, though a role for government
regulation is not completely ruled out. A majority (62 percent)
favor primary reliance on improved private sector efforts to
control costs, while nearly one-third (31 percent) advocate
improved private sector cost control measures coupled with an
increased reliance on government regulation. There is very little
support (4 percent) for a solely government solution such as state
or national health insurance with government responsibility for
containing costs through top down budget controls.
Senior executives are, on the whole, optimistic about managed
care as a solution to the cost problem. Forty-eight percent think
that HMOs, PPOs, and similar models of networks of providers are
effective in containing costs, while 34 percent say they are not
effective. Eighteen percent don't know. Among those who feel
that provider networks are not currently effective, a majority
think they could be become effective if appropriate changes were
made.
When asked about other approaches to reducing health care
costs, strong preferences emerge. Eighty-five percent think that
increasing physician and hospital efficiency by applying
guidelines and standards for good medical practice and the use of
technology assessment is a good solution. Equally popular (85
2
percent) is the reduction of unnecessary use of services through
prior approval or other utilization review mechanisms. A majority
(77 percent) favor use of networks of efficient providers with
patient incentives to use those providers. Increased employee
cost sharing is seen as a good solution by 72 percent.
Solutions involving only a government role are rarely judged
a good solution. For example, only 15 percent of senior
executives think that government limits on providers' prices is a
good solution.
Health care costs are very much on the minds of the top level
executives. Health care costs are named by the executives as one
of the four or five factors having the most adverse effect on the
prosperity of the respondents' corporation, the prosperity of
American business, or the prosperity of the nation.
When asked explicitly to rank health care costs among the
factors that adversely affect their corporation's financial
status, a majority (51 percent) call it a "significant but not
critical problem." One-third of the senior executives label it
"one of the top five," while 11 percent say it is "one of the top
three." Three percent call it their "number one problem."
Among senior executives who say health care costs are a
problem for their corporation, 7 in 10 say the issue is a lot more
important today than two or three years ago.
3
Nearly nine out of ten of the senior executives interviewed
say their company has made major changes in its health benefit
plan specifically targeted at containing costs. Primary among
these changes is a move to managed care with provider networks and
an increase in employee cost sharing.
Roughly three-quarters rate themselves successful at curbing
wasteful or excessive use of health services by their employees,
while 20 percent say they have been not too or not at all
successful. Another 6 percent don't know how to rate their
efforts.
March 22, 1990
4
National or state health
insurance-good or bad
solution?
Don't Know
Good
1%
5%
Bad
1990 CEO Survey,
94%
HIAA
Roper for HIAA
What factors adversely affect
American business prosperity?
Trade Deficit
15%
Health Care Costs
24%
Educational System
25%
Cost of Capital
27%
Foreign Competition
33%
Federal Deficit
49%
0%
10%
20%
30%
40%
50%
(Responses to Open-ended Question)
1990 CEO Survey,
HIAA
Roper for HIAA
Do you think that HMOs, PPOs,
etc. are effective in controlling
costs?
Don't Know
Could they be effective
18%
if appropriate changes
were made
Effective
Don't Know
48%
18%
Yes
59%
34%
Not Effective
24%
No
1990 CEO Survey,
HIAA
Roper for HIAA
Are these good or bad solutions
to the health cost problem?
Don't Know
National/State Health Insurance
o
94%
Bad
Provider Price Controls
15%
75%
10%
Good
Provider Networks
77%
11%
12%
Protocols/Technology Assessment
85%
9%
6%
UR/Reduce Service Use
85%
13%
Increase Cost Sharing
72%
25%
0%
20%
40%
60%
80%
100%
1990 CEO Survey,
HIAA
Roper for HIAA
FOR IMMEDIATE RELEASE
Contact: Don White
HIAA
202/223-7782
Health Insurance Association of America
NEWS RELEASE
HEALTH INSURANCE INDUSTRY PROPOSES
MAJOR REFORM OF SMALL EMPLOYER MARKET
Washington, D.C., February 26, 1990 -- Leaders of the
country's major health insurance companies have approved a plan
that would make health care coverage available to all small
employers and help contain the cost of that coverage.
The plan, which represents a major reform of the small
employer market, was adopted by the Board of Directors of the
Health Insurance Association of America (HIAA) at its meeting last
week. It is one part of an overall plan proposed by the industry
to increase access to health care coverage for those Americans
without it.
Dr. Louis W. Sullivan, Secretary of the Department of Health
and Human Services, attended the meeting and applauded the
Association's efforts to address the problems facing small
employers in providing health insurance for their employees.
"The insurance industry has taken the lead in seeking to
assure that small employers and their employees have access to
health insurance coverage," said Carl J. Schramm, HIAA president.
"This plan represents a fundamental change in the way our industry
does business," he added.
Under the plan, employers with 25 or fewer employees who
seek to purchase health insurance for their employees would not be
- more -
1025 Connecticut Avenue, NW Washington, DC 20036-3998 202/223-7783
denied coverage even if one or more of their employees might
otherwise be a high risk or uninsurable in today's market. Once
insured, neither the group nor an individual in the group would be
denied continued coverage because the group's or an individual's
health deteriorates. Further, when an employer changes insurance
companies or an employee changes jobs, individuals would generally
not have to meet any new pre-existing condition restrictions.
There also would be limits on how much the premium and annual
premium increase could vary for similar groups. The plan calls
for a system to be funded by the private sector through which high
risk individuals could be reinsured.
The reinsurance system also would ensure that if for some
reason an employer group was unable to obtain coverage, they could
purchase basic coverage for 150 percent of the average premium for
similar groups. Losses from the reinsurance system would be borne
equitably by the health benefit market.
Legislation at the state and federal levels would be
necessary to obtain market-wide compliance with the reforms, to
allow the reinsurer to fund its losses, and to preempt state
provider and benefit mandates.
Because rising health care costs have a direct impact on the
small employer market and all aspects of insurance, the Board also
adopted a report on health care cost containment that relies
heavily on the increased development of managed care programs.
Those programs include channelling patients to efficient
providers; improving the productivity and efficiency of providers
by identifying and encouraging providers to adopt appropriate and
efficient methods for delivering care under specific
circumstances; promoting the use of economic incentives for
consumers to be cost conscious in making choices to utilize
medical services and in selecting providers; and promoting efforts
- more -
to improve the general health status of the population through
support for wellness programs, illness prevention activities and
consumer education efforts.
There also were cost containment recommendations for
government actions which include establishing policies that will
encourage the development of managed care systems, and that will
match supplies of medical resources with needs, changes to reduce
the occurrence of malpractice and to reform the malpractice
liability system, and activities related to data collection and
analysis.
The recommendations on small employer market reform and cost
containment will be incorporated into HIAA's four-point plan to
increase access to health care coverage through a joint
public/private approach.
HIAA is a trade association of 320 commercial insurance
carriers who provide health insurance protection for approximately
90 million Americans.
###
HIAA
February 23, 1990
HEALTH INSURANCE ASSOCIATION OF AMERICA
PROPOSAL FOR FINANCING HEALTH CARE FOR AMERICANS
SUMMARY
I.
The problem is complex because of the heterogeneous nature of the population without
health insurance.
A. Thirty percent are below the federal poverty level; 30 percent are near poor, between
100 percent and 200 percent of the poverty level; and 40 percent are above 200
percent of the poverty level.
B. Eleven percent are the self-employed and their families; 13 percent are half-time
employees and their families; and 51 percent are full-time employees and their
families.
II. HIAA proposes a four point plan:
A. Reform and expand Medicaid to cover all those below the federal poverty level,
regardless of family structure, age or employment status.
1. Eliminate categorical restrictions.
2. Uncouple eligibility for Medicaid from eligibility for welfare cash payment.
3. Low-income individuals above the poverty level should be able to "buy into" an
income-related package of primary and preventive care.
4. "Spend-down" program should be required in all states for the medically needy.
5. For those Medicaid-eligible people who are working, optional "buy-out" program
should allow state to pay the employee share of employer group insurance and
to provide transition coverage for those coming off Medicaid.
B. Allow insurers to offer more affordable coverage:
1. Extend ERISA preemption of state mandated benefits given to self-insured plans
to insured employee plans.
2. Allow insurers to market lower-cost prototype plans.
C. Provide tax assistance to make private coverage more affordable.
1. Help small businesses afford coverage by allowing a 100 percent tax deduction
for the self-employed as long as they provide equal coverage for their employees.
2. New tax subsidies should be targeted to financially vulnerable groups. Subsidies
could be directed at: financially fragile employers, low income individuals offered
employer sponsored coverage and low income individuals not offered employee
sponsored coverage.
D. Guarantee availability of private health insurance:
1. For high risk groups, a private reinsurance mechanism should be established, with
losses spread equitably through the private sector.
2. For uninsurable individual, state pools with losses financed by state general
revenues or other broad-based funding should be established; if a state does not
act, HHS should set up a pool in that state with losses paid with federal funds that
HHS would otherwise spend in that state.
III. HIAA also believes that quality and cost of care are essential components of any health
care financing proposal, and we encourage the creation of an environment that promotes
low-cost insurance and managed care benefits, not subject to state mandates or other
restrictions.
HIAA
Health Insurance Association of America
PROPOSAL FOR SMALL EMPLOYER MARKET REFORM
The Health Insurance Association of America has developed a fair
and equitable proposal to assure that all small employers can
avail themselves of relatively affordable health insurance
coverage. The HIAA plan would:
1.
guarantee that employers with fewer than twenty-five
employees who seek to purchase health insurance for their
employees will not be denied such health insurance coverage
even if one or more employee might otherwise be either
uninsurable or a high risk in today's world;
2.
provide that once insured, neither the group nor an
individual in the group may be denied continued coverage
because the group's or the individual's health deteriorates;
3.
limit the rate of year-to-year premium increases relative to
other groups insured by the same carrier;
4.
permit medical underwriting only for the purpose of
determining the level of risk, and thus anticipated health
claims;
5.
not deny coverage or apply new preexisting condition
restrictions to an insured individual in a group changing
either employers or insurance carriers;
6.
establish a privately funded and administered reinsurance
mechanism through which insurers could reiňsure high risk
persons;
7.
assure that any group would pay no more than 150 percent of
the average cost of similar groups for basic coverage.
1025 Connecticut Avenue. NW Washington, DC 20036-3998 202/223-7780 Telecopier 202/223-7897
From : HOUSTON LEGISLATIVE CONSULTING 202-396-2049FAX2051 Dec. 16. 1991 11:37 AM
P02
HEALTHCARE EQUITY ACTION LEAGUE
EMPLOYERS UNITED FOR REFORM
NEWS RELEASE
Contacts: David Cullen, National Federation of Independent
Business, (202) 554-9000
Joan Simmons, Healthcare Leadership Council 360
(202) 347-5731 -
HOLD FOR RELEASE UNTIL 2 PM TUESDAY, OCTOBER 15, 1991
BROAD BUSINESS ALLIANCE PUBRES
FOR HEALTH CARE REFORM
WASHINGTON, not. 15--Putting the nation's health care system
back on the path to solid, long-term reform is the goal of a
broad business alliance, the Healthcare Equity Action League
(HEAL), announced at the National Press Club here today.
"The basic structure of our health system is sound,"
National Federation of Independent Business Vice President John
Motley said in announcing the group. "Not only can it be
repaired, it can be improved and broadened to meet the health
needs of all our citizens. The solution we offer will be cost-
effective, efficient, and will deliver the greatest and best
possible/health care to the largest number of people.'
HEAL, a coalition of nearly 300 major firms and
organizations (see enclosed list), represents hundreds of
thousands c.f large and small businesses, health care providers,
insurers and related groups who play a major role in offering
health care to millions of employees. Participants are committed
to strengthening the U.S. health care system through a series of
incremental, apolitical reforms.
The proposed solution, a seven-step, incremental plan,
includes repeal of state health insurance mandates, reversal of
anti-managed care laws, reform of small employer insurance
underwriting and medical malpractice policy, equal tax treatment
of employers, and promotion of better informed consumer
participation and cost containment.
"HEAL WAG formed to refute the idea that there are only
radical approaches to solving our country's health care
problems, said Healthcare Leadership Council President Pamela G.
Bailey. "We offer a better way. One that stabilizes the
delivery system by getting people covered, keeping them covered
and bringing accountability into the system."
-more-
Extended Page 2.1
Page TWO Healthcare Equity Action Leaque
Bailey called the HEAL plan "a roadmap for how we can 021--
government, provider, insurer, employer and consumer-work
together to reform our system."
Food Marketing Institute Senior Vice President and General
Counsel Harry Sullivan said the nation's employers are being
overwhelmed by the increasing cost of providing health benefits
to workers. "We can't wait any longer while grandiose and
unrealistic proposals to reform our system are proposed, debated
and rejected. The HEAL proposals represent a sound, realistic
way to address the dual problems of cost and access. They should
be adopted as quickly as possible."
National Association of Wholesale-Distributors President
Dirk Van Dongen said the alliance is convinced by experience and
common sense that the problems of access to health care cannot be
solved through any form of national health insurance or
government-mandated coverage.
"The main obstacle for employers who want to provide health
care benefits is cost," said National Restaurant Association
Senior Director of Government Affairs Mark Gorman. "If an
employer can't afford it today, a mandate from Washington won't
make it affordable tomorrow either. Solving the cost problem is
the only way to get at the access problem. That's what HEAL is
all about,"
Following the announcement, the members of HEAL will
undertake a nationwide grass-roots effort to deliver its message
before upcoming political campaigns obscure the issue,
The Healthcare Equity Action League is headquartered at 1725
K Street, N.W., Suite 710, Washington, D.C. 20006,
* * *
From : HOUSTON LEGISLATIVE CONSULTING 202-396-2049FAX2051 Dec. 16. 1991 11:37 AM
P03
HEALTHCARE EQUITY ACTION LEAGUE (HEAL)
STEERING COMMITTEE
Actna Life & Casualty
Now York Life Insurance Company
American Apparel Manufacturers Association
NMTBA-The Association for Manufacturing Technology
American Bakers Association
Pagonis & Donnelly Group. Inc.
American Business Conforence
Pennsylvania Hospital
American Cyanamid Company
PepsiCo
American Farm Buroau
The Principal Financial Group
American Hardware Manufacturers Association
The Prudontial
American Institute of Architects
Schering-Plough Corporation
American Managed Care & Roview Association
ServiceMaster Management Services
Amway Corporation
Super Valu Stores, Inc.
Associated Builders and Contractors
The Travolors Companies
Association of Health Insurance Agents
U.S. Poderation of Small Businesses, Inc.
The Beer Institute
Wendy's International, Inc.
Beneficial Management Corporation
Wills Eye Hospital
Burroughs Wellcome Company
Carl Karcher Enterprises
Caterair International Corporation
The CIGNA Corporation
Council of Smaller Enterprises
Bil Lilly & Company
Bvansion Hospital Corporation
Federation of Amorican Health Systems
Florists' Transworld Delivery Association
Food Marketing Institute
Harman Management Corporation
Harris Methodist Health System
Health Industry Distributors Association
Health Industry Manufacturers Association
Health Insurance Association of America
Health Midwest
Health One
Healthcare Loadership Council
Horshoy Foods Corporation
Hillcrest Baptist Medical Center
Humana Inc.
Industrial Distribution Association
International Mass Retail Association
John Hancock Mutual Life Insurance Company
Kimberly Quality Care
The Law Offices of Deborah Steelman
Marriou Corporation
Morrison Incorporated
National-Amorican Wholesale Grocers' Association
National Association of Aluminum Distributors
National Association of Chain Drug Stores
National Association of Convenience Stores
National Association of Wholosaler-Distributors
National Committee for Quality Health Care
National Council of Chain Restaurants
National Fedoration of Independent Business
National Medical Enterprises, Inc.
National Restaurant Association
National Retail Federation
National Wholesale Druggless' Association
From : HOUSTON LEGISLATIVE CONSULTING 202-396-2049FAX2051 Dec. 16. 1991 11:37 AM
P04
HEALTHCARE EQUITY ACTION LEAGUE (HEAL)
GENERAL MEMBERSHIP
Advertising Specialty Institute
Aerospace Industries Association
Dairy and Rood Industries Supply Association
Air-conditioning & Refrigeration Wholesafers Association
Davenport (IA) Chamber of Commorce
Digital Dealers Association
Alabama Wholesale Bear & Wine Association
Albertson's, Inc.
Bokerd Drug Company
Allen Park (MI) Chambor of Commerce
Blectrical-Bloctronics Material Distributors Association
Engine Service Association
Alliance of American Insurers
Parm Equipment Wholesalers Association
The Aluminum Association
Fire Suppression Systems Association
American Council on Education
Fluid Power Distributors Association
American Electronics Association
Food Industries Suppliers Association
American Federation of Small Business
Food Processing Machinery and Supplies Association
American Furniture Manufacturers Association
Foodmaker, Inc.
American Machine Tool Distributors Association
Foodscrvice Equipment Distributors Association
American Meal Institute
General Morchandise Distributors Council
American Society of Computer Dealers
Georgia Door Wholesalers Association
American Supply Association
Glenwood Springs (CO) Chamber Rosort Association
American Traffic Safety Services Association
Grand Rapids Arce (MI) Chamber of Commerce
American Veterinary Distributors Association
Cirenter Dolrols Chamber of Commerce Wholesaler-Distributor
Appliance Parts Distributors Association
Association
Associated Beer Distributors of Illinois
Greater North Dakota Association/WAM Council
Associated Equipment Distributors
Greater Raleigh (NC) Chamber of Commorce
Associated General Contractors
Groator Washington Food Wholesalers
Association of Ingersoll-Rand Distributors
HoalthTrust, Inc.
Association of Stool Distributors
Honderson (NV) Chamber of Commerce
ATLAND Management Corporation
Hobby Industry Association of America
Automotive Service Industry Association
Hoffmann-La Rocho Inc.
Aviation Distributors & Manufacturers Association
Independent Electrical Contractors, Inc.
Baker Industries, Inc.
Independent Laboratory Distributors Association
Beauty & Barber Supply Institute
Independent Medical Distributors Association
Becton Dickinson & Company
Independent X-ray Dealers Association
Beer & Wine Association of Ohio
Indiana Bevorage Alliance
Beer Industry League of Louisiana
Institutional & Service Texillo Distributors Association
Boor Industry of Florida
International Dairy Foods Association
Bear Wholesalors Association of Now Jersey
International Truck Parts Association
Benihana National Corporation
International Sanitary Supply Association
Bicycle Wholesale Distributors Association
Iowa Grain and Food Association
Biscult & Cracker Distributors Association
Irrigation Association
California Association of Tobacco & Candy Distributors
JT&A, Inc.
California Association of Wholesalers-Distributors
Jewelry Industry Distributors Association
California Beer & Wine Wholesalers Association
Jobbors Crodit Association
California Trucking Association
Johnson & Johnson
Central Wholesalers Association
The Krystal Company
Ceramic Tile Distributors Association
Lonolr County (NC) Health Cost Containment Coalition
Chamber of Commerce of Hawaii
Long John Silver's, Inc.
Chamber of Commerce of New Rochelle (NY)
Los Angeles Fasteners Association
Charles M. Ostholmer & Associates, Inc.
Machinery Doalors National Association
Chicago Metropolitan Distributors Association
Manitowoc-Two Rivers (WI) Chamber of Commerce
Clemson Area (SC) Chamber of Commerce
Material Handling Equipment Distributors Association
Colorado Bear Distributors Association
MDU Resources Group. Inc.
omputer Dealers & Lossors Association
Metro East (MI) Chamber of Commorce
Copper & Brass Servicenter Association
Metropolitan Life Insurance Company
Extended Page
4. 1
Mid-America Supply Association
New York State Plumbing & Heating Wholesalers
Middle Atlantic Wholesalors Association
North American Hordcultural Supply Association
Mississippi Malt Bevorage Association
North American Wholesale Lumbor Association
Missouri Beer Wholesalers Association
Northamorican Heating & Airconditioning Wholesalers
Montgomery County Pharmaceutical Association of
Association
Pennsylvania
North Carolina Boor Wholesalers Association
Motorcycle Industry Council
North Carolina Wholesalers Association
Music Distributors Association
Northern Rhode Island Chamber of Commerce
National Appliance Parts Suppliers Association
Northwestom Public Service Company
National Appliance Service Association
Optical Laboratories Association
National Association of Chemical Distributors
Orange County (NY) Chamber of Commerce
National Association of Container Distributors
Outdoor Power Equipment Distributors Association
National Association of Electrical Distributors
Pacific Southwest Distributors Association
National Association of Fire Equipment Distributors
Pet Industry Distributors Association
National Association of 1400r Covering Distributors
Petroleum Equipment Institute
National Association of Flour Distributors
Petroloum Marketers Association of America
National Association of Hose and Accossories Distributors
Piscataway-Middlescx Area (NJ) Chamber of Commerce
National Association of Meat Purveyors
Pocono Mountains Chambor of Commerce
National Association of Realtors
Post Card Distributors Association of North America
National Association of Recording Merchandiscrs
Power Transmission Distributors Association
National Association of Service Merchandising
Reno Sparks Convention and Visitors Authority
National Association of Sign Supply Distributors
Rhode Island Hospitality Association
National Association of Sporting Goods Wholesalers
Safety Equipment Distributors Association
National Association of Tobacco Distributors
Santa Ans (CA) Chamber of Commerce
National Association of Wholesale Independent Distributors
Schiml Laco & Embroidery Manufacturers Association
National Beer Wholesalers Association
Scripps Momorial Hospitals
National Building Material Distributors Association
Shoe Serviço Institute of America
National Business Forms Association
Small Businoss of America
National Candy Wholesalers Association
Snack Food Association
National Club Association
South Carolina Beer Association
National Commercial Refrigeration Sales Association
Southern Wholosale Hardware Association
National Electronic Distributors Association
Southorn Wholesalers Association
National Fastener Distributors Association
Specialty Tools & Pasteners Distributors Association
National Food Distributors Association
St. Lucie County (FL) Chamber of Commorce
National Frozon Food Association
Stool Service Center Institute
National Grocors Association
Suspension Specialists Association
National Independent Poultry & Food Distributors Association
Tennossee Mall Boverage Association
National Industrial Glove Distributors Association
Textile Care Allied Trados Association
National Insulation and Abatement Contractors Association
United Products Formulators & Distributors Association
National Lawn & Garden Distributors Association
Wallcovering Distributors Association
National Locksmith Suppliers Association
Waste Management Inc.
National Marine Distributors Association
Water & Sower Distributors of America
National Office Products Association
Westom Association of Fastenor Distributors
National Paint Distributors
Westorn Suppliers Association
National Paper Trado Association
Wholesale Beer Distributors of Arkansas
National Printing Equipment & Supply Association
Wholesale Beer Distributors of Texas
National Sash & Door Jobbers Association
Wholesale Distributors Association
National School Supply & Equipment Association
Wholesale Florists & Florist Suppliers of America
National Solid Wastes Management Association
Wholesale Stationers' Association
National Spa & Pool Institute
Wine & Spirits Wholesalers of America
National Truck Equipment Association
Wisconsin Wholesale Beer Distributors Association
National Welding Supply Association
Woodworking Machinery Distributors Association
National Wheel & Rim Association
Woodworking Machinery Importers Association
National Wholesale Furniture Association
National Wholesale Hardware Association
New Hngland Paper Merchandising Association
Now England Wholesalers Association
New York State Boor Wholesalers Association
From : HOUSTON LEGISLATIVE CONSULTING 202-396-2049FAX2051 Dec. 16. 1991 11:37 AM
P05
HEALTHCARE EQUITY ACTION LEAGUE
EMPLOYERS UNITED FOR REFORM
NEWS RELEASE
SOLVING THE HEALTH CARE CRISIS:
STATEMENT OF BASIC PRINCIPLES
We support an effective, affordable, free enterprise solution to the health care cost crisis
facing the Nation.
Problems of cost and financing have limited access to quality health care for the millions of
Americans who do not now have health care coverage: and they jeopardize future access for the
additional millions of Americans whose insurance coverage is at risk due to rising costs or
expensive personal health problems.
We strongly believe that viable solutions to the health care crisis must address the problems
of cost and access in tandem, We also believe that solutions must be immediate, substantive,
incremental, and based on market principles, relying on a mixture of incentives and structural and
legislative reforms.
Problems of access will not be solved through any form of national health Insurance or
through federally-mandated coverage. We oppose so-called "play or pay" proposals which would
require all employers to provide health Insurance to their employees or pay an excise tax. Trigger
proposals which would mandate health insurance by a time certain if it wore not otherwise
generally made available by employers are unacceptable as well.
We oppose proposals to restructure our health care system with government imposed
controls. We also oppose proposals that would have government toll patients how much health
care they can have, rather than realistically addressing the causes of the cost spiral.
We fully recognize that the health care crisis cannot be solved by maintaining the status
quo. More to the point, the problems will only get worse if delay of relief occurs on issues of
general consensus for the sake of extended public debate on highly controversial proposals.
In fact, our respective memberships demand change and relief. Therefore, while we firmly
oppose certain universal proposals, we recommend that the following specific, positive steps be
implemented as expeditiously as possible:
Full Federal Preemption of State Health Insurance Mandates. There are
currently over 800 state mandates which impose a myriad of requirements on health
insurance policies, thus significantly increasing the cost of promiums for non-self-insured
businesses and the cost of health care for all businesses. Freeing all policies from those
well-meaning but counterproductive mandates would immediately and significantly lower
the cost of health Insurance for all firms and increase acce is for small business and
individuals alike.
(continued)
Extended Page
5.1
Preemption of State Laws Which Restrict Managed Care and Cost Sharing.
Managed care systems have proven effective. Yet, A number of states have enacted so-
called "freedom-of-choloe" laws or other provisions that block the efforts of those who buy
health care to implement innovative managed care systems. Further, many states have
regulations limiting the amount of cost-sharing by Individuals, thereby inhibiting selective
contracting arrangements and barring Incentivos needed to encourage employees to be oost
conscious in their decision-making. Eliminating barriers to managed care could
substantially reduce costs due to wasteful or inappropriate care.
Reform of Insurance Underwriting. To assure health care access, health insurers,
HMO's and third party administrators should guarantee the availability and renewability of
health Insurance to those who wish to purchase it, regardless of size, status, or
geographical location of the purchaser. Risk-sharing should be increased by elimination of
rating practices which penalize individuals and small employers. Further, the donial of
health insurance to employees and dependents due to pre-existing conditions when an
employer changes his insurer or when employees change jobs should be prohibited.
Cancellation of insurance when employees or dependents file claims should also be
prohibited.
Reform of Medical Malpractice Provisions. Prudent malpractice reform will
reduce the need for costly defensive testing and other forms of health care delivery used to
avert malpractics claims.
Full Deductibility of Health Insurance Premiums for All Businesses. While
incorporated businesses are allowed to deduct 100 percent of their health insurance
premiums, partnerships, sole proprietors and S-porporations only receive a 25 percent
deduction. The tax code should be amended to provide equal treatment to all businesses,
which would in turn provide an incentive to smaller companies to obtain or expand health
Insurance.
Consumer Empowerment and Individual Responsibility. A competitive health
care marketplace will not occur unless patients behave like educated consumers who believe
that they have a responsibility to make good health care decisions. Patients must become
active and informed participants in their own care and their own well-being. In order that
they and their surrogates may have timely and reliable information on fees, treatments, and
physician practices, the development and dissemination of data, including outoomes
research, and appropriate practice protocols and hospital ratings should be encouraged.
Wellness education is another significant key to controlling future health care expenditures.
Health Care Cost Increases Must be Brought Under Control, While the
recommendations listed above will have salutary effects on escalating COSIS and on current
cost-shifting to the employer-based system, more will need to be done. The development
of a market based system can provide affordable health care without compromising quality.
Incentives must be provided for government, providers, and private Insurers to
aggressively pursue innovative purchasing and managed care techniques, Health care
providers must become part of the solution to escalating health care costs.
FOR THE HEALTH OF A NATION
Report of
The National Leadership Commission on Health Care
EXECUTIVE SUMMARY
Formed in 1986 by a group of concerned citizens to address the three major problems of
cost, quality, and access to health care, the National Leadership Commission on Health
Care proposes a major restructuring of the nation's health care system. The Commission's
proposal provides universal access to a basic level of health services; it controls escalating
costs through wider use of innovative purchasing of care and through greatly expanded
research on the quality and appropriateness of health care; it emphasizes expanding the
practical application of that research. The Commission believes that reducing redundant
health services will both contain costs and improve the quality of health care.
The Commission brought together a distinguished group of leaders from many areas --
health care, business, law, economics, politics, ethics, and labor. The Commission sought to
develop a clear sense of the scope of the problems in health care, a vision to reach for,
and workable solutions to bring us closer to that vision. It released an interim statement
in June, 1987, outlining its view of the seriousness of the problem.
During its deliberations, the Commission agreed on a vision of a healthy society in the
21st century, one which promotes preventive care and healthy lifestyles through vigorous
public education, and operates an innovative, efficient health care system that provides
universal access to a basic level of appropriate, affordable care. The system would en-
courage personal responsibility for choosing good health and appropriate treatment, sup-
port a strong doctor-patient relationship, and promote a public-private partnership to con-
trol costs and constantly improve the quality of care. It would also find a solution to the
malpractice crisis.
PROBLEMS WITH THE CURRENT HEALTH CARE SYSTEM
The American health care system has done in many ways a remarkable job in providing
health care to the American people. American medicine has long been a leader in the
field, making superb contributions in the form of important new technologies to prevent
and treat disease. Public and private insurance programs combine to protect most Amer-
icans against devastating losses at vulnerable times of ill health and disability. Yet mil-
lions of Americans are disenfranchised, encountering barriers of entry to the health care
system. Health care costs are escalating so rapidly that many payers have become alarmed
at the upward spiral. And fundamental questions are now being asked about the un-
certainties in the quality and appropriateness of care being delivered.
Serious strains in the system are raising the frustrations of all who participate in it.
Physicians are concerned about outside parties intruding on their clinical decisions and
damaging the doctor-patient relationship. Hospitals find it increasingly difficult to cope
with pressures for cost containment and with rapidly changing laws and regulations.
C
NLCHC
Government and major private payers are trying with limited success to control rising
costs. Patients are faced with higher costs, but they don't see care improving sufficiently
to justify their increasing payments and they continue to present the system with ever-
increasing demands. Such strains in the health care system will be exacerbated by the
rapid aging of the population, the AIDS epidemic, and the continuing technology explo-
sion, which spawns more and more new treatments, that, though often beneficial, are also
costly.
These problems grew out of the postwar period, which ushered in wonder drugs, sophisti-
cated medical technology and the expansion of health insurance to cover the majority of
the population. With the adoption of the Medicare and Medicaid programs in 1965, 85
percent of the population had some form of health insurance, leaving the consumers of
health care shielded from, and thus much less sensitive to, cost increases than consumers
in other sectors of the economy.
Cost. These developments have led to increases in health care expenditures that far out-
strip general inflation rates. Factors fueling the cost increases include general inflation,
accelerated inflation in medical care prices, the aging of the population, patient demand,
increasing physician supply, the use of inappropriate care, the practice of defensive medi-
cine, and advances in medical science leading to expensive new technologies -- all com-
pounded by the inherently inflationary ways in which most care is financed and
delivered. Americans spent $550 billion on health care in 1988, over 11 percent of GNP,
far more than any other country. If these trends continue, costs will double by 1995 and
triple by the turn of the century, hitting $1.5 trillion in the year 2000. In that year,
health care will consume 15% of GNP, and this country will spend $5,551 on health care
for every American man, woman, and child. The National Economic Commission
estimates that if present trends continue, by the year 2005 the Medicare program alone
will exceed in size either the Social Security or the defense budgets.
As a result, cost containment has become a rallying cry in both the private and public sec-
tors. The federal government has enacted the prospective payment system (PPS) for hospi-
tals, setting payment in advance according to a patient's diagnosis. Some state govern-
ments have instituted closely regulated global budgeting for hospitals and tight control on
new construction. Private payers have turned to managed care mechanisms, such as health
maintenance organizations (HMOs), as a way to hold down costs, Such efforts have suc-
cessfully reduced hospital use, but they have also shifted costs to the outpatient setting,
and these costs have continued to rise rapidly.
Access. Increasing costs are accompanied by another disturbing development: growing
numbers of people without health insurance, and therefore without good access to health
care. Financial strains on the Medicaid program mean that it now covers only 45 percent
of those in need. Today about 37 million Americans lack insurance; a third of them are
children. Perhaps an equal number have very inadequate coverage. Thus one out of
every four Americans may be either uninsured or seriously underinsured. These people
tend not to seek help until they are quite sick, which makes them more of a burden on
the health care system than they would otherwise be.
Quality. Quality of care is the third area of major concern. We have insufficient in-
formation on the quality and outcomes of medical services and insufficient means of
monitoring the quality of care and fostering its improvement. Recent studies have
heightened this concern, citing large regional variations in the use of some medical ser-
vice that do not seem to be based on differences in medical need. Over the past two
years, there has been a steady drumbeat of stories detailing the percentage of unnecessary
or equivocal care in the use of one procedure after another. It has become clear to many
2
experts that this is no longer a problem that is isolated in a few specialities but rather is
generic to the health care of the nation. The sad fact is that our quality control system is
at best rudimentary. Hospitals, for example, have traditionally focused only on how care
is delivered; they have just begun to measure the impact of that care on patient outcomes.
Patients also have few tools to help them assess the quality and appropriateness of their
treatment.
These critical problems in cost, quality, and access to health care in America present a
clear and compelling case for change. They are interrelated problems that cry out for in-
terrelated solutions. Piecemeal approaches have not worked in the past, and will not in
the future. Each problem can be solved effectively only in relation to the other two. Un-
til we can better define quality and appropriate care, we cannot really know what is
worth providing access to and what is worth paying for.
THE COMMISSION'S PROPOSAL
In response to these serious health care problems, the Commission proposes a new pub-
lic/private partnership that will provide access for all to a health care system which will
deliver cost-effective, appropriate care. Under our proposal, all Americans would be re-
quired to have health insurance coverage for a package of basic service.
Our model calls for a shared responsibility to finance care for the currently uninsured. It
retains a significant role for the states and private insurance companies. It is structured
to foster competition and innovation in the quality and efficient management of health
care services. The plan calls for a strong education campaign to encourage patients to
adopt healthy lifestyles and to inform patients and providers about guidelines for ap-
propriate care to help them make better decisions about treatment.
The Commission's strategy, then, has the following critical, interrelated elements:
o Provide universal access through a Universal Access (UNAC) program to a basic
level of health care, regardless of income.
o Make individual Americans responsible for having health insurance for at least a
basic level of care.
0 Expand the existing insurance system by encouraging all employers to provide
health insurance for their employees.
0 Spread the cost of universal access systematically among all individuals and
employers who can afford to contribute and make explicit now hidden costs, with
everyone paying a small premium for a basic level of care for those who cannot af-
ford to pay.
0 Establish a nationally determined level of basic services of health care available to
all, allowing for state variations above that level.
O Greatly increase research on the appropriateness, effectiveness, and quality of care
and publicize the results widely to help patients and providers assess treatment.
o Control costs by reducing the amount of inappropriate care as a result of the ex-
panded research.
3
0 Encourage the marketplace to work more efficiently by stimulating the development
and use of solid information about appropriateness, quality, and cost, thus giving the
private sector the tools to develop more efficient organizations of providers and other
cost-effective delivery systems.
0 Develop a process for a strong public-private partnership to improve quality and
control costs by coordinating the expanded research on appropriateness and quality
and disseminating the results through the health professional organizations.
0 Develop and continually update national guidelines useful to practitioners in
making clinical decisions, through the appropriate medical specialties.
0 Call on existing state agencies to operate the program to finance care for the cur-
rently uninsured, negotiating fair compensation for providers who serve that popula-
tion.
O Promote nationwide the current, promising state reforms in malpractice.
A realistic strategy must not only deal with all three areas of cost, access, and quality; it
must also engage all the parties which provide, pay for and use health care. This means
that any effective system-wide solution must be a public-private partnership. The respon-
sibility does not lie with the government alone, which pays for 40 percent of the country's
health care bill, but also with private individuals and other private payers, who account
for the other 60 percent.
While our systemic approach to reform is important, individual parts of the solution can
be modified without endangering the integrity of the overall solution. For example, the
source of the funding for improving access could come from general revenues rather than
a specific fee. It was with the intention of assuming fiscal responsibility that we decided
to specify a source of funding and to sketch out the dimensions of the cost.
Fundamental Principles
The Commission's proposal is based on seven fundamental principles which the Commis-
sion developed during its deliberations.
I. Principle of Universal Access:
There should be no financial barrier separating Americans in need of health care
from access to available care.
II. Principle of Fair Compensation:
Every provider of health services in America should be adequately compensated for
services rendered to patients.
III. Principle of Clinical and Economic Freedom:
To the maximum extent possible, without unduly compromising other important prin-
ciples, health policy ought to restore clinical freedom in rendering health services and
economic freedom in financing these services, within the context of adequate counter-
vailing market power from those who ultimately pay for health-care in America.
4
IV. Principle of Shared Responsibility:
Financial responsibility for health care for those too poor to afford it should be
shared by government, individuals and businesses.
V. Principle of Individual Responsibility:
To help achieve the goal of universal access to health care, the individual has a duty
to have adequate health insurance coverage for him-or herself and dependent chil-
dren.
VI. Principle of Basic Benefits Guarantee:
The design of a basic package of health-service benefits to which all Americans
should have reliable access is ultimately a federal responsibility.
VII. Principle of a Strong Doctor-Patient Relationship
Any health care system should include the goal of protecting the integrity of the
doctor-patient relationship.
The Commission's proposal builds upon the American tradition of providing private
health insurance through the workplace. It is designed to encourage continued extensive
reliance on that approach, without mandating that employers provide such coverage. The
system thus preserves the pluralistic approach to health-care financing apparently
preferred by Americans.
The National Leadership Commission does not consider it appropriate for it to establish
the national basic benefits package for all Americans. The initial package would be set
by enabling legislation. But the Commission strongly recommends that mental health
benefits and preventive services, especially prenatal care, be included in this package.
Access to Care For All Americans
The Commission's proposal, known as the Universal Access or UNAC program, would ex-
tend health coverage to the 37 million Americans who now lack health insurance. All
Americans would be covered by the national basic package of services. There are several
ways they could obtain this coverage. Most Americans would probably continue to obtain
privately-financed coverage as an employment benefit, with the employer contributing
most or all of the money for the premium. Any American could also choose to purchase
this coverage with personal funds or could supplement employer-provided coverage with
personal funds. Older Americans would continue to receive Medicare coverage. Everyone
else would receive public coverage through the UNAC fund. The Commission proposes
that all employers, and all individuals with incomes above 150 percent of the poverty
level, pay a premium or a fee to finance health insurance for those not covered by em-
ployee plans. The Commission's plan uses strong incentives to encourage employers to of-
fer coverage and to improve coverage under some existing plans. It also has provisions
for all individuals who can afford to do so to pay for part of their care.
The Commission has presented a model plan in its report which details how this proposal
could work in practice. Estimates of the costs of various provisions of the proposal and
how they would be financed are given in the full report.
5
SEE FINANCING CHART
The Commission's UNAC safety net system would be administered at the state level by a
cooperative effort involving all stakeholders in the health care system. The federal gov-
ernment would provide guidelines for the program designed to treat all Americans equal-
ly, regardless of location, but the program would not be centrally directed as is, for exam-
ple, the Medicare program. There would be ample room for regional variations within
broad federal guidelines.
In addition to a national package of minimum health care benefits to which every Amer-
ican has access, the Commission's proposal allows the states to determine any additional
benefits for their residents. The UNAC program would be administered by state agencies
which would have the power to negotiate with providers and practitioners to establish the
package and payment policies for UNAC beneficiaries. The Commission explicitly chose
to work with existing state agencies rather than create a new level of bureaucracy.
The Commission recommends that states broaden their agencies to include representatives
of the major private stakeholders in health care -- payer, practitioners, and consumers --
perhaps appointed by state governors. The Commission recognizes that it will not be easy
to generate the cooperation needed to realize its goals, primarily because attitudes will
have to change. But the Commission is unanimously convinced that cooperation is both
desirable and possible. It is clear to the Commission from its discussions with dozens of
physicians and the testimony of leaders of the professions that they are eager to play a
role in this process. The Commission regards their role as essential to the success of any
proposed change in health care policy.
Cost Control and Quality Improvement
The Commission's approach to cost control goes beyond the previsions summarized above.
It is also inextricably linked to its proposal for improving the quality and appropriateness
of health care. The Commission plan seeks to remove cross-subsidies and make explicit
the cost of care for all. At least some of the cost of providing universal access would be
made up in savings resulting from improved quality control. The Commission's strategy is
designed to improve both the value of care and the efficiency of the systems that provide
care. A marketplace approach by definition, the Commission's proposal would greatly in-
crease information available to providers and patients on the quality and appropriateness
of health care. Such information, if widely disseminated, would allow the competitive
advances of the past few years to play out.
The Commission has concluded that an important level of inappropriate over- and under-
use of care has been documented for some time now. The reasons for inappropriate care
include the following: an incomplete and continually evolving science base for that care,
often creating uncertainty about appropriateness and effectiveness in clinical decision-
making; perverse financial incentives; seeking to meet unrealistically high patient expecta-
tions; and the malpractice crisis. In addition, systems for assuring that care is provided in
the best fashion are too often inadequate.
Health professionals and patients need several types of new knowledge. When a consensus
on medical knowledge is possible, they need to learn better which tests and procedures are
appropriate for an individual situation. When guidelines exist for particular conditions or
treatments, they need to examine the scientific basis of those guidelines to determine its
adequacy. They also need more basic scientific information about which medical prac-
tices are truly effective and which are not. And they need better ways to measure what
6
HEALTH CARE FINANCING
VERY: A SHARED RESPONSIBILITY
EMPLOYER
INDIVIDUAL
Pays Y Premium
Provides
Does Not Provide
Without Health
Does Not
Has Health
Into UNAC
Health Insurance
Health Insurance
Insurance &
Have Health
Insurance
Above 150% of
Insurance And
Coverage
Federal
And At Or
Poverty Level
Below 150% of
Federal Poverty
Level
Pays Y Premium
Pays x1 Fee
SHARED RESPONSIBLITY
Pays X2
Pays Y
Attach Copy
Pays Y
Into UNAC
Fee
Premium
of Policy to
Premium
Into UNAC
1040 Form
Into UNAC
EMPLOYED ?
UNAC
Federal &
Employer Pays
Fully
State
X + Y
X1 Fee
Subsidized
Medicaid
- and
By UNAC
(Acute-care)
UNAC Subsidizes
Funding
X₂ Fee
%
TREMIUM
Private
50 State Agencies
National Quality
Insurance &
Improvement
Private
Initiative
Delivery
Private Delivery of
National Package of
Basic Services
happens when care is provided and how it can be more effective. This can only occur
within a general understanding that each patient presents a unique set of problems.
Improving information on quality and appropriateness will have far-reaching effects. In
addition to reducing the level of uncertainty, which in turn reduces unnecessary and in-
appropriate care, successful improvements in quality and appropriateness information
should also help stem the tide of increasing health care costs, increase efficiency, improve
the doctor-patient relationship, and reduce malpractice suits. Fortunately, there is solid
evidence that health care providers will use relevant, well-presented information to im-
prove the quality and appropriateness of their care. The Commission has found that gov-
ernmental agencies and private organizations with clinical expertise are actively pursuing:
(1) Objective analysis of the proper use of existing and emerging approaches to diag-
nosis and treatment, often known as appropriateness research and technology assess-
ment;
(2) Clinical trials on the effectiveness of medical practices;
(3) Research designed to understand and, where appropriate, reduce practice varia-
tion, often known as outcomes research and practice pattern monitoring;
(4) Synthesis of current research and clinical experience into practical clinical prac-
tice guidelines; and
(5) Development and use of clinical and organizational measures to stimulate im-
provement in the quality and appropriateness of care.
National Quality Improvement Initiative
The Commission has found, however, that this work is woefully underfunded. The Com-
mission has also found lacking a process where participants can develop a nationally coor-
dinated strategy. The Commission proposes a National Quality Improvement Initiative
that would fund such work and would ideally involve periodic collective priority setting,
coordination, and progress evaluation, while maintaining decentralized activities.
The Commission's plan would raise additional funds for this important research with a
supplemental fee applied to the Y premium (see chart) for both employers and individu-
als. We estimate that the fund should rise gradually to $500 million in research per year,
when the rate applied to both the employer and the employee Y revenue bases would be
about one one-hundredth of one percent (0.011 percent).
At the Commission's request. Lewin/ICF prepared a very rough estimate of potential
savings that could be generated by reducing inappropriate care. Based on HCFA estimates
that as much as two percentage points of the annual hospital intensity index would be in-
fluences by practice pattern changes, the Commission's estimate suggests a potential saving
of two percentage points of the currently projected growth rate of health expenditure.
This means that over a four-year period, about $5.9 billion annually for Medicare Parts A
and B combined could be influenced by changes in practice pattern. For national health
expenditures, the figure is $84 billion for fiscal year 1990-1993, or an average of $22 bil-
lion annually that could be influenced by practice pattern changes. Using a second meth-
od of approximating the potential effects of changing practice patterns on health care
costs, the Commission developed a very conservative "bottom up" estimate of potential
savings from reducing inappropriate services; assuming a 4 percent growth rate in health
expenditures annually, this estimate could approach $1.5 billion a year by FY 93.
7
Malpractice Reform
The Commission believes that the current system of malpractice litigation against pro-
viders of health care -- hospitals, physicians and nurses -- impedes the delivery of eco-
nomical, high-quality care to American citizens. The Commission recognizes that patients
should be fully compensated for injuries resulting from negligent care, and it supports
strengthening procedures to identify and correct below-standard practices, but the present
system of medical malpractice litigation does not achieve either goal and has other ad-
verse consequences as well.
Malpractice litigation has driven up the cost of medical care overall and, in some
specialties, at a dramatic rate. Providers who can obtain malpractice insurance are forced
to pass on its rising cost to patients (or third-party payers) through increased fees. The
fear of malpractice suits encourages defensive medicine, in which providers perform addi-
tional procedures, especially diagnostic ones, principally to protect themselves against law
suits. Such procedures increase both the cost of care and sometimes health risks to
patients. The current system of malpractice litigation also corrodes the patient-physician
relationship.
We are, therefore, convinced that the malpractice system must be reformed, and we are
encouraged by the breadth of interest in reform both within the medical profession and
outside it. Some promising proposals have been adopted experimentally on a state or local
basis, and we strongly support continued exploration of potential solutions, and the adop-
tion of the most promising reforms at the national level. Such proposals include institut-
ing strict criteria for expert witnesses in malpractice suits, strengthening standards of
negligence, limiting punitive damages and contingency fees, encouraging mediation and
arbitration as alternatives to lawsuits for resolving disputes.
CONCLUSION
The Commission calls for a solution in three parts to a system undermined by three very
serious problems. The problems are unnecessary, because we know how to solve them.
They are larger than they ever needed to be because for years we understood them too
little, we spent time blaming one party or another, and we did not have the scientific
knowledge in some areas to respond to them. In recent years, we have found the will, we
have learned that no one is to blame, and we have developed the scientific ability to im-
prove, to begin to close the gap between art and science that has characterized medicine
for many years. There will always be some art and some uncertainty, because our science
continuously stretches into new areas and because every patient presents a unique set of
problems. But today we have some promising methods for reducing uncertainty. It is in-
cumbent on us to use them and to improve them continually to advance the quality of
care and control the cost of care.
Above all, we are hopeful. Much has happened in just the two-and-a-half short years of
the life of this Commission that indicates to us that all parties involved in analyzing,
delivering, paying for, and benefiting from health care in this country are anxious to be-
come involved in a solution that works. We hope that our strategies will suggest a way.
8
THE NATIONAL LEADERSHIP COMMISSION ON HEALTH CARE
HONORARY CO-CHAIRS
Former President Jimmy Carter
Former President Gerald Ford
Former President Richard M. Nixon
CO-CHAIRS
The Honorable Robert D. Ray, LL.B., President, Life Investors Insurance Co. of
America
The Honorable Paul G. Rogers, J.D., Attorney, Hogan & Hartson
PRESIDENT
Henry E. Simmons, M.D., M.P.H., Visiting Research Professor, George Washington
University
COMMISSION MEMBERS
Morris B. Abram, J.D., Attorney, Paul, Weiss, Rifkind, Wharton & Garrison
Stuart Altman, Ph.D., Dean, Florence Heller School, Brandeis University
William F. Buehler, Group Vice President - Human Resources, AT&T
Walton E. Burdick, Vice President of Personnel, I.B.M.
Robert N. Butler, M.D., Brookdale Professor of Geriatrics & Adult Development
Mt. Sinai Medical Center, New York
Theodore Cooper, M.D., Ph.D., Chairman & Chief Executive Officer, The Upjohn
Company
Merlin K. DuVal, M.D., Senior Vice President, Samaritan Health Service
George C. Eads, Ph.D., Vice President & Chief Economist, General Motors Corporation
Charles E. Edwards, M.D., President, Scripps Clinic & Research Foundation
Harry Garber, Vice Chairman, The Equitable Life Assurance Society of the United States
Robert H. Gaynor, Group Vice President - Planning, AT&T (Ret.)
J. Peter Grace, Chairman, W.R. Grace & Co.
Sister Mary Corita Heid, R.S.M., President, Sisters of Mercy Health Corporation
J. Bruce Johnston, J.D., Executive Vice President, USX
Paul F. McCleary, M.Div., Executive Director, Christian Children's Fund, Inc.
J. Alexander McMahon, J.D., Chairman, Department of Health Services Administration,
Duke University
Richard Merrill, LL.B., Dean, University of Virginia Law School
Edmund Pellegrino, M.D., Director, Kennedy Institute of Ethics, Georgetown University
Douglas S. Peters, Senior Vice President, Blue Cross and Blue Shield Association
Jane Pfeiffer, Management Consultant
Uwe E. Reinhardt, Ph.D., James Madison Professor of Economics & Public Affairs,
Princeton University
Alice M. Rivlin, Ph.D., Senior Fellow, The Brookings Institution
The Honorable Charles S. Robb, J.D., U.S. Senator, Virginia
C. B. (Jack) Rogers, Jr., President & COO, Equifax, Inc.
David Rogers, M.D., The Walsh McDermott Distinguished Professor of Medicine
The New York Hospital-Cornell Medical Center
James B. Rogers, Jr., Chairman, Rogers Holdings
Jill S. Ruckelshaus, Womens Campaign Fund
James Sammons, M.D., Executive Vice President, American Medical Association
David Satcher, M.D., Ph.D., President, Meharry Medical College
John J. Sweeney, President, Service Employees International Union, AFL-CIO
Samuel O. Thier, M.D., President, Institute of Medicine, National Academy of Sciences
ADVISORY GROUP
David Banta, M.D., Health Council, The Hague
Steven C. Beering, M.D., President, Purdue University
Charles R. Buck, Jr., Sc.D., Staff Executive, Health Care Programs, General Electric
Company
Roger Bulger, M.D., President, Association of Academic Health Centers
Guido Calabresi, LL.B., Dean, Yale University Law School
Thomas Chalmers, M.D., Distinguished Physician, Veterans Administration
The Honorable Clark Clifford, J.D., Attorney, Clifford & Warnke
William Foege, M.D., Executive Director, Task Force for Child Survival
Rev. Theodore M. Hesburgh, C.S.C., President Emeritus, University of Notre Dame
The Honorable Carla Hills, LL.B., Co-managing Partner, Weil, Gotshal & Manges
John Hogness, M.D., Former President, Association of Academic Health Centers
The Honorable Barbara Jordan, J.D., Professor, L.B.J. School of Public Affairs, University
of Texas
Catherine E. McDermott, President, Grant Makers in Health
Michael Maccoby, Ph.D., Director, Program on Technology, Public Policy & Human
Development, John F. Kennedy School of Government, Harvard University
Dennis O'Leary, M.D., President, Joint Commission on Accreditation of Healthcare
Organizations
Paul H. O'Neill, Chairman & Chief Executive Officer, Aluminum Company of America
Robert G. Petersdorf, M.D., President, Association of American Medical Colleges
Arnold S. Relman, M.D., Editor, The New England Journal of Medicine
The Honorable Elliot Richardson, LL.B., Attorney, Milbank, Tweed, Hadley & McCloy
Lewis Thomas, M.D., President Emeritus, Memorial Sloan-Kettering Cancer Center
EXECUTIVE DIRECTOR
Margaret M. Rhoades, Ph.D.
RESEARCH STAFF
Anne K. Burns, Senior Researcher
Robin J. Strongin, Research Analyst
Jude Payne, Research Analyst
Jeff Stryker, Research Analyst
Joy Garney, Executive Assistant
Amanda M. Hock, Research Assistant
Beverly Nissenbaum, Secretary
Phyllis A. Anderson, Secretary