Los Angeles legislators have had a busy month shepherding AIDS legislation through the state Assembly and Senate. They saw four bills they sponsored pass in their respective houses by wide margins, with likely full approval later this year.

The bills were all jointly sponsored by the non-profit L.A-based AIDS Healthcare Foundation, the largest community-based provider of AIDS and HIV treatment and information in the United States.

AB 889, authored by Assemblyman Martin Gallegos, D-Baldwin Park, would shorten the amount of time it takes to get newly approved drugs onto the list of drugs that are approved for reimbursement under the California AIDS Drug Assistance Program.

The program provides drugs to low-income AIDS patients who don't qualify for Medi-Cal. The bill would require the State Office of AIDS to add any new drug within 60 days after a state medical board determines it should be added to the approved-drugs list. The bill passed the Assembly June 3 on a vote of 58 to 19.

AB 818, authored by Assemblywoman Diane Martinez, D-Monterey Park, would require primary care providers to offer information, counseling and HIV testing to patients between the ages of 15 and 54 in California counties with a high incidence of HIV infection. The bill passed the full Assembly 41 to 35 on June 5.

AB 1052, sponsored by Assemblyman Antonio Villariagosa, D-Los Angeles, would require that AIDS patients who are put into a Medi-Cal managed care plan, such as L.A. Care, have access to the same drugs that Medi-Cal fee-for-service members get.

Medi-Cal fee-for-service currently covers all drugs for HIV and AIDS treatment immediately after those drugs receive Food and Drug Administration approval. The bill passed the full Assembly 57-16 on May 29.

Finally, SB 1035, authored by Sen. Richard Polanco, D-Los Angeles, would expand Medi-Cal coverage to people infected with HIV but who do not yet have AIDS. Currently, to qualify for Medi-Cal an HIV patient must prove they are seriously disabled by the disease.

New drug treatments have kept many HIV-positive individuals from developing AIDS, and thus they are ineligible on a disability-basis for coverage, though they may still qualify for financial reasons. SB 1035 would expand coverage to HIV-infected people to help offset costs of drug treatments that postpone the development of AIDS. The bill passed the Senate June 5 on a vote of 21-11.

Indemnity sector shrivels

Fewer Americans than ever are enrolling in indemnity, or "traditional" health insurance plans, according to a survey by KPMG Peat Marwick LLP released last week.

The survey found that the once-dominant indemnity health insurance sector attracted just 18 percent of enrollments for 1997, down from 26 percent last year, and from 71 percent in 1988. (Like premiums, enrollment figures are tallied at the beginning of each year.)

Managed care has undergone a corresponding increase, accounting for 81 percent of all enrollments for 1997. HMOs attracted 33 percent, while PPOs, or preferred provider organizations, drew 31 percent, the study found. Other, less-mainstream types of managed care plans accounted for the rest.

A major contributing factor to the decrease in indemnity enrollments was that just 51 percent of workers had the option to choose a conventional plan, down from 57 percent in 1996 and 89 percent in 1988.

A separate study by Weiss Ratings Inc., which evaluates insurance companies, found that in 1996 the insurance industry experienced nearly a 13 percent increase in profits, compared with 1995. But in the indemnity sector, profits plunged 64 percent, primarily due to cutthroat competition from HMOs.

The good news for employers is that 1997 health care premiums are just 2.1 percent higher than last year's, according to the KPMG study. The Consumer Price Index, by comparison, rose 2.5 percent, and workers' earnings increased 2.9 percent, according to the study.

That's in keeping with a recent trend in which health care premiums have risen an average of 2.4 percent annually over the past three years.

The bad news is that 1997 may be the last year for a while in which such modest growth is recorded.

"Some analysts view 1997 as the calm before the storm and there are strong reasons to believe so," said James Buckley, a KPMG partner who oversaw the survey. Still, he said, it is unlikely premiums will return to the 12 percent overall health care inflation rate experienced during the late 1980s and early 1990s.

Business group's costs flatten

While other employers may rue the coming year for higher employee health insurance costs, the Pacific Business Group on Health is projecting a mere 1 percent increase in the cost of health coverage for most of its 500,000 members.

PBGH is an alliance of companies that pool resources to negotiate more favorable insurance rates from providers. The 19 California members of its negotiating alliance include the Automobile Club of Southern California, Bank of America, Ross Stores, Wells Fargo Bank and Safeway Inc.

For 1998, the group reports, the 15 HMOs with which PBGH contracts will raise rates an average of 1 percent. "California health plans successfully kept a lid on inflation," said James Franklin, who heads the group's negotiating alliance.

Franklin said the three plans that serve the largest number of employees from PBGH member companies Kaiser Permanente, PacifiCare and Health Net guaranteed rates through the turn of the century. Franklin would not say what those rates would be.

The PBGH also reported squeezing out about $1 million in rebates from its HMOs last year, for missed performance measurement targets.

PBGH employers spend about $500 million annually on health care premiums.

Glendale firm grows

Glendale-based Medical Resources Management Inc. said it will purchase two competitors in the field of medical equipment supply and repairs. MRM will buy Med Surg Specialties Inc. and SurgiCare Services Inc., both of Brea.

Med Surg provides laser surgery services, such as maintenance and repairs. It had 1996 revenues of about $1 million. SurgiCare is still in the development stage, but holds an exclusive five-year contract to repair endoscopes for all hospitals owned by Tenet Health Systems Medical Inc. (Endoscopes are devices used in minimally invasive surgery to visually examine inside the body.)

Santa Barbara-based Tenet is the second-largest operator of hospitals in the United States.

Ben Sullivan is a reporter for the Los Angeles Business Journal and covers the health care industry.

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