When the American Association of Health Plans releases its report on the financial effect of proposed healthcare reforms, what are the chances the report will say the regulations would be cost-effective?
If history is a guide, not very great.
Reminiscent of the national healthcare reform debate of several years ago, a new debate has developed over federal and state legislation positioned as consumer protection. This latest debate has cranked up the self-serving research machine.
Special-interest groups are starting to flood the halls of Congress with reports on how the proposed regulations would help or hurt consumers (read help or hurt their cause).
The AAHP represents the managed-care industry, which opposes legislative reform. The association's report on the cost of such regulation will be released this spring. The AAHP has argued that much "consumer protection" legislation is designed to protect the interests of providers.
Susan Pisano, the AAHP's director of communications, said the association's report is being prepared with the Barents Group, a division of KPMG Peat Marwick. This spring the AAHP will conduct regional press conferences with Barents, using data to show how a 10% increase in premiums would affect families, she said.
The most recent guesstimate came last week when the Congressional Budget Office modestly conceded it was "extremely uncertain" about its projection that employers' healthcare costs would increase by about $1 billion a year if Congress passes legislation based on the Consumer Bill of Rights (See story, p. 6).
There was no such modesty from the Health Benefits Coalition, which represents insurers, employers and one provider group-the Premier alliance of not-for-profit hospitals. The coalition said last week that a study it commissioned found that costs associated with the Patient Access to Responsible Care Act, pending federal legislation that's sponsored by Rep. Charlie Norwood (R-Ga.), could total more than $1 billion annually. The study was conducted by the regulatory consulting firm Multinational Business Services.
The Norwood bill, sometimes known as PARCA, would ban prior authorization for specialist referrals, prohibit incentives to limit medically necessary services and require access to out-of-network providers for enrollees, among other mandates.
The Health Benefits Coalition's study found the bill would impose 207 new regulatory mandates, only 15% of which were designed solely to protect patients.
But a study released last month by Muse & Associates for the Patient Access to Responsible Care Alliance, an organization that backs PARCA, found that the bill "does not mandate new health benefits."
Instead, "PARCA provides a process to improve patient access and quality of care." Therefore, PARCA would cause only "a slight increase in managed-care premiums," the Muse study found.
"Using best evidence, we estimate that national premium increases in the managed-care health insurance market will average between 0.7% and 2.6% if PARCA is enacted," the Muse study said.
An earlier study by Milliman & Robertson, commissioned by Wal-Mart stores, estimated PARCA would increase nationwide premiums 7% to 39%, with an average increase of 23% (See chart). Milliman is a benefits and actuarial consulting firm.
"The most important message from those studies is that people are real serious about pushing their view and lining up all the support they can," said Peter Kongstvedt, M.D., a partner with Ernst & Young in Washington.
Larry Levitt, director of the Kaiser Family Foundation's changing healthcare marketplace project, said the foundation will issue its own report soon. The foundation is an independent research organization that is not associated with Kaiser Permanente. Levitt conceded: "It's a $3 billion industry. It's very hard to find someone who doesn't have some interest in the outcome of the legislative debate."
Kongstvedt said: "There's an old joke that goes: Accounting and actuarial are exact sciences. Tell me what you want, and that's exactly what I'll give you."
But even with his reservations, Kongstvedt said: "Milliman & Robertson is a very prestigious, well-regarded actuarial firm. You can't ignore them."
The National Center for Policy Analysis, a Dallas-based independent think tank, issued a report in November 1997 based on the Milliman study. It said that the average cost for a family HMO enrollment in 1996 was $5,304, which could increase to about $6,524 per year if PARCA is passed.
A report released in early February by the Blue Cross and Blue Shield Association reviewed state legislation passed in 1997. The report did not analyze the laws' impact on premiums, but along with the report, the association released information compiled in December 1992. That data showed that state legislation resulted in a 5% to 20% increase in the average monthly premiums of 15 Blues plans.
Susan Laudicina, director of research at the Blues association and author of the report, defended the old data: "It was true in 1992 that, aggregately, mandated benefits significantly increased average premium rates, and it's even more true today because you have even more mandates than in 1992 and even more exotic mandates."
But last November, a study of proposed California legislation by Price Waterhouse, prepared for the Kaiser Family Foundation, found that passing one or two mandates might not raise premiums to any great extent. But the study said, "If a large proportion of current managed-care legislation were enacted, the impact might be very large premium increases."