Among the various factors responsible for driving up employers' cost of health care is that care providers are finally gaining ground in their long-fought battle for a bigger chunk of the health care dollar.

Providers of medical care have been some of the loudest fighters in the health care battle. Doctors are marching on the state Capitol warning of "rolling medical blackouts." Hospitals are threatening to close their doors to members of tight-fisted HMOs. And in a federal courtroom, health insurers stand accused of being racketeers who conspire to cheat doctors.

The result of all this insurrection?

Insurers are beginning to loosen up the purse strings, but are passing along those higher provider costs to policyholders. Meanwhile, providers continue to insist that the health care dollar and their share of it is still too small in California to keep them afloat and also provide for quality care.

"We can't discount health care in California far below what it costs elsewhere in the country, and still have what we call an excellent health care system," argues Jack Lewin, chief executive of the California Medical Association, the doctors' trade association. "We have time to try to resolve the problems in health care before it's a crisis, but it will be a crisis in the very near future."

Health insurers acknowledge that doctors have had a tough time adjusting to the new realities of managed care, but they dispute the notion of a crisis, saying that recent increases in health plan premiums are being partially passed through to providers.

"Everyone is doing a little better this year because the health plans raised premiums," said Walter Zelman, president and chief executive of the California Association of Health Plans, the insurer trade group.

But a "little better" is not enough for doctors who practice in a state where the insurance premiums by some estimates are 30 percent lower than the national average.

A report by the Kaiser Family Foundation last year found that, even though California physicians grab a higher percentage of the health care dollar than their colleagues nationwide (31 percent vs. 24 percent), their mean net annual income ($172,400) is lower than the national average ($199,600) and it dropped $20,000 between 1995 and 1997.

California hospitals, meanwhile, took in just 37 percent of the health care dollar in 1997, vs. 41 percent nationwide.

HMOs blamed

Doctors say this is largely the result of HMOs that pay low fixed or "capitated" rates per patient that do not even cover the cost of services. This has led to the failure of hundreds of physician groups. So they, and hospitals, are fighting back.

For reprint and licensing requests for this article, CLICK HERE.