States, companies pioneer changes in health care to keep costs down

September 20, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- If health care reform sounds like just another scheme hatched in Washington, think again.

The birthplace of reform is closer to home. Major changes in the health system are under way throughout the 50 states, driven by employers, consumers and state officials wrestling with runaway costs.

With these costs continuing to rise like a flood-swollen river, more changes are coming, regardless of what Congress does with President Clinton's health reform plan.

"I think even if there were no bills" in Congress, "some reform is inevitable," predicts Robert J. Blendon, a health policy expert at Harvard University.

Chances are you're already feeling the effects of health reform. Are you in a health maintenance organization or restricted to a list of doctors? Has your company started "wellness" programs or sponsored exercise classes? If Medicaid pays for your care, does the state require you to visit a family physician before seeing a specialist?

If the answer is yes, then you are one of tens of millions of Americans for whom health care reform already is a reality, even if no one calls it by that name.

What Mr. Clinton seeks, in the plan he'll announce on television Wednesday night, is to use the federal government's regulatory muscle to guide change -- social engineering not unlike the Army Corps of Engineers' efforts to channel the Mississippi.

He would require all employers and employees to pay for insurance, determine a standard package of benefits for all Americans and impose ceilings on health care spending.

Debate has broken out about the scope of federal regulation called for by Mr. Clinton, but not about the need for federal action. Even among congressional Republicans, who usually fight government intervention, there's been what some term a profound change: Most in the GOP now endorse a federal role, although most are opposed to employer mandates or spending ceilings.

At the grass-roots level, people increasingly recognize the limits of what they can do.

Coping with costs

Companies are eager for federal help with the costs of employee health care benefits. In the meantime, a growing number are trying innovations, especially wellness programs intended to improve employee health.

One-third of 2,500 companies surveyed in 1992 by Foster Higgins, a benefits consulting firm, offered either an on-site fitness center or subsidized health club memberships.

Some businesses offer financial incentives. Dominion Resources Inc., an energy company in Richmond, Va., rebates money to employees who stay healthy and don't tap into a joint employer-employee pool. This year, the company wrote checks of up to $800 for 100 of its 175 workers.

Dominion also pays workers from $20 to $50 a month if they keep their blood pressure, weight and cholesterol levels low, don't smoke and wear seat belts. With these programs, company officials hope to get workers thinking in the long term about their health.

"Nobody has any incentive tomorrow to lose 10 pounds," says company spokesman Mark Lazenby. "If we eat that second piece of pie or that fifth or sixth beer, we won't feel the consequences until 20 years down the road."

The biggest employer trend has been toward managed care, especially health maintenance organizations. Although they have an uneven record of controlling costs, HMOs generally perform better than traditional insurance plans that permit consumers to go to any doctor they please, including specialists.

In 1992, for the first time, more than half the workers at companies surveyed by Foster Higgins participated in managed care plans. The most popular were HMOs, which enrolled 26 percent of workers. Another 20 percent joined preferred provider organizations, which restrict participants to a list of participating doctors and hospitals.

States take a first step

Absent any real aid from Washington, employers and workers have turned to their state governments for help.

Vermont Gov. Howard Dean, a Democrat and formerly a practicing physician, is one of about two dozen governors of states from Maryland to Hawaii who have decided to pursue reform on their own.

"It's inevitable," Dr. Dean says of reform. "What's driving it is the incredible increase in cost we've had," and middle-class concerns about losing health insurance.

Medicaid, the medical program for the poor, is breaking the budgets of many states, which split the costs with the federal government. From 1988 to 1992, the program's price tag more than doubled, from $54 billion to $120 billion.

Vermont has approved a statewide budget for health care spending, public and private -- in effect, a ceiling, which becomes binding next year. It has barred insurers from dropping people because of health problems. And it is considering a plan that "will look very much like the Clinton plan" in some respects, Dr. Dean says.

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