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Business Defends HMOs

December 11, 1996
State Capital Bureau

JEFFERSON CITY - Business and health care representatives say a legislative committee's recommendations for tougher regulation of the managed care industry will actually do more to hurt consumers than to help them.

Associated Industries President Chris Long said the 33 recommendations from the Managed Care Joint Committee would dramatically raise premiums for people in HMOs and other managed care operations.

Loosening the definition of a medical emergency, one of the major recommendations from the committee, would encourage abuse of the emergency room for non-emergency ailments, Long said.

"Too often, we are seeing the emergency room used as a glorified doctor's office," he said. "Consumers go to the ER for a cold or the flu and that increases costs for everyone in the system."

Associated Industries, along with another of the state's largest business lobbying groups -- the Missouri Chamber of Commerce -- have come out against the recommendations. Instead of legislation, they propose the committee should use the next legislative session to gather more information rather than relying on the testimony heard during four months of hearings.

"A lot of the recommendations are driven on anecdotal problems and isolated incidents," Long said.

Another item of contention is whether to give patients some direct access to specialists without having to be referred by family physicians. In HMOs, family physicians act as "gatekeepers," and control when and where a person can see a specialist.

Patient advocates and physicians want to loosen the gatekeepers' control, but Mike Winter, a lobbyist with the Missouri Managed HealthCare Association, said that would fundamentally undercut the notion of managed care. Dan Mehan of the Missouri Chamber of Commerce added such an approach would adversely affect the competitive edge among managed care plans.

HMOs and other managed care operations seek to reduce costs by controlling patient access to doctors and specialists.

Nearly 2 million Missourians are covered by some form of managed health care and experts estimate that figure will double within a few years.

While managed care has come under attack by physicians and doctors, businesses have embraced it as another option to keep the single most costly item of employee benefits in check -- health insurance.

But business is warning that increased government regulation could cut into those cost savings.

"The more regulation that the state puts on insurance programs, the more employers tend to go self-insured," said Randy Scherr, a lobbyist with Kaiser-Permenante. "The more you regulate and the more benefits you lap on, then higher the costs go, and the less the employer and the employee want it."

However, committee co-chair Rep. Tim Harlan, D-Columbia, said he didn't buy that reasoning.

"We specifically asked them to address the cost issues and apparently, they didn't feel that it was important because they didn't address," he said. "I have to question the motives of people who were invited to present testimony and then don't do it."

Self-insured companies formulate and develop their own health plan. The company then can either go through an HMO network to gain access to the providers or it can develop the contracts.

Federal law exempts self-insured companies from state regulation, although Harlan said Congress is considering applying similar recommendations to self-insured companies.

Because the company assumes the financial risk of the health plan, usually only larger companies chose this option.

Long said nearly 70 percent of Missouri workers are in a self-insured health plan and if the committee did pass many of the recommendations into law, then more businesses would opt to go the self-insured route.