The tripartite regulation of America's health services

The Republican takeover of Congress suggests that the payer-driven forces of managed care, capitated payment, and the regional networks (alliances) will serve as centerpieces to improve the organization, financing, and delivery of our nation's health services. These "voluntary" alliances, frequently as an amalgamation of health providers and health insurance underwriters, often foreshadow the powerful, geographically linked regional health networks that are evolving into oligopolies. The authors anticipate, as a result, the formation of state health services commissions that will regulate market share, the scope of health services, reimbursement rates and allowable profits. State departments of public health and insurance will have their own regulatory duties. Complex relationships will result as these groups will often have conflicting, politically-charged goals.

1995 in the states: refinement of reform

With the exception of Kentucky, all state legislatures met in regular session in 1995. By mid-September, all but 10 had adjourned for the year. Not surprisingly, health care reform continued to be a priority for lawmakers. However, in sharp contrast with reform activity in past years, state lawmakers chose refinement over sweeping reform as their preferred approach to health care issues. The year was not without its significant legislative initiatives, including the roll-back of far-reaching reform plans in Minnesota and Washington. However, the fine tuning of insurance market reforms, Medicaid reform, continued growth of medical savings account (MSA) legislation, and making managed care more consumer-friendly were the mainstream activities of this legislative year.

Managed care liability and the capitated provider

While there have been no reported cases as yet on the subject of ERISA preemption of claims arising from utilization review decisions by providers, it will unquestionably be a significant issue facing providers that participate in capitated arrangements. If preemption is determined not to be available, providers will be exposed to risks from which health plans are currently shielded. Providers conducting utilization review should be following this issue as it develops, but should also be obtaining insurance for this risk to the extent it is available (e.g., it will not be available for punitive damages). Providers should also consider negotiating provisions in their contracts with health plans to the effect that any utilization review conducted by the provider is on behalf of the health plan and that the provider's utilization review activities will be covered under the health plan's liability insurance.

Purchasing alliances: still in the picture

In 1993, purchasing alliances were a hotbed of legislative activity. Today, 13 states have enacted laws establishing them. Here's a brief update of how these alliances are working.

Key state legislative provisions on purchasing alliances

In order to function effectively in post-reform healthcare markets, behavioral healthcare professionals must understand and interact with health purchasing alliances. Healthcare reform initiatives based upon the principles of managed competition envision an important role for cooperative health purchasing organizations, or "health alliances," that collect premiums and contract with health plans for the provision of comprehensive health services delivered within the framework of a standardized benefit package. Health purchasing alliances have already been implemented in eight states, and this trend is expected to grow. The following article illustrates the structure and authority of the health alliances that are already in operation, and is presented here to give Behavioral Healthcare Tomorrow journal readers an up-to-date overview of reforming healthcare markets. This matrix arrays recent state laws which we identify as clearly including components of managed competition or purchasing alliances. Other states undoubtedly have elements of reform that include some aspects of these concepts. For example, under legislation, a Vermont health care authority was established and, among other things, charged with developing two comprehensive reform proposals, one of which will involve multipayors and the other a single-payor system. Options will likely embody many of the activities of alliances. Vermont is not included in this matrix because these provisions are still in the developmental stage.

Choosing among health plans

The health care reform system that is ultimately adopted, suggest the authors of this analysis, should rely on market forces, rather than government regulation, to reduce cost and improve quality in our health care delivery. A major portion of this paper compares the Health Security act (the Clinton proposal), the American Health Security Act (the McDermott bill), the Health Equity and Access Reform Today, HEART (the Chafee proposal), and the Managed Competition Act (the Cooper bill). The article focuses on the major areas of difference between these alternative proposals in the extent to which they would achieve true market-based reform, small group reform, universal coverage, and financing mechanisms.

New developments in 'any willing provider' laws

As the debate over healthcare reform continues, the controversy concerning "any willing provider" laws also continues. "Any willing provider" laws require a healthcare insurer (or managed care organization) to establish criteria that a provider must meet in order to participate as a network provider. Such laws prohibit an insurer from denying any provider willing to meet those criteria from participating as a network provider. Proponents of any willing provider laws cite the recent decision by the U.S. Supreme Court not to review a lower court ruling finding in favor of a hospital as validation of such laws.

Health reform: examining the alternatives

This Issue Brief examines the major issues of the health reform debate. The issues that must be resolved before reform can be enacted include: allocation of health care resources, universal coverage versus universal access, composition of risk pools, employer and individual mandates, and distribution of health care services' costs. This report also contains short descriptions and analyses of the following proposals: McDermott-Wellstone, Clinton administration, Cooper-Breaux, Chafee-Thomas, Michel-Lott, Nickles-Stearns, and Gramm. Proposals without an individual mandate will not achieve universal coverage. An individual mandate raises significant enforcement issues. An employer mandate will not achieve universal coverage by itself. Depending on the number of hours an employee must work to be included in a mandate, an employer mandate could potentially extend health insurance coverage to as many as 85 percent of the currently uninsured. Each individual has a risk of needing health care services. Restructuring the health insurance market is accomplished by changing the way individuals and their risks are pooled. The composition of these risk pools will determine the costs of health insurance and the distribution of these costs. The theory behind medical saving accounts is that the market for health insurance currently leads to health care cost inflation because many events covered under most health insurance plans are not truly insurable. There are two issues involved in medical savings accounts--the impact on low-income individuals and individuals' ability to evaluate the quality of care they receive. The present market does not provide individuals with adequate information for assessing the quality or effectiveness of medical care. Among the critical issues in health reform is how to reduce the rate of health care cost inflation. The effect of proposals that impose explicit budget caps or price controls on health care cost inflation can be more easily estimated than other means of controlling costs if it is assumed that the political will exists to hold these caps and price controls at the levels set in the proposal. It seems unlikely that shortages or queues would develop in the near term if a single-payer health system were enacted. Currently, the U.S. health care system is characterized by overcapacity. In the longer term, however, with restrictions on hospitals' access to new technology and funds to invest in new equipment and beds, shortages and queues might develop.