ANN DONAHUE
Staff Reporter
There are 65 bills currently moving their way through the California Legislature that target the health care system. Most of the proposals will have major economic impacts for employers, consumers and health plans.
The problem is, nobody is sure just how high those costs will be.
The vast majority of the bills have no cost estimate. As a result, lobbyists are scurrying to create their own price tags in an effort to win legislators over to their side.
Earlier this month, the California Association of Health Plans, an industry lobbying group, released the first estimates of the financial cost of the bills, each of which has cleared either the Assembly or Senate and is awaiting approval in the other house.
The association claims that the cumulative price tag comes in at between $4 billion and $8 billion in increased premiums. Having the only hard-and-fast numbers on the subject gives the group an early leg up in terms of lobbying legislators an advantage that consumer groups are trying to counteract by developing their own numbers.
“The HMO industry has no doubt done a statistical analysis that would reveal that even if the Ten Commandments were applied to health care, the costs would be staggering,” said Jamie Court, executive director of the Santa Monica-based Consumers for Quality Care.
Court’s organization is telling legislators that the reform measures will actually save money rather than costing billions.
“The cost of medical negligence injuries annually is $60 billion that’s billion, with a ‘B,’ ” Court said. “If we can deter a small percentage of those costs by getting people the care they need up front, we’ll be far ahead of the cost curve.”
In particular, Court is pushing SB21, one of several bills that would make HMOs legally liable for care decisions.
“It’s more cost-effective,” Court said. “Texas has a liability law and costs have been going up much slower there than in California, where there is no liability law.”
The Senate’s Insurance Committee has been holding discussions and recently hired an actuary to do an analysis of the proposed bills. But the committee is headed by Sen. Jackie Speier, D-San Mateo, an ardent consumer advocate and health care reformer.
A spokesman for Speier said the idea behind the committee’s analysis is to formulate something in response to the numbers put out by the health care industry.
Walter Zelman, president of the CAHP, said the group is undertaking an intense, bill-by-bill lobbying effort to explain the costs to legislators.
Two of the bills described by the group as likely to entail substantial costs are AB 88, which mandates mental health coverage, and AB 55, which increases health plan liability and adds external review to the medical decision process.
AB 88, introduced by Assemblywoman Helen Thomson, D-Vacaville, would provide for outpatient care, inpatient services and prescription drugs for the treatment of mental illnesses including schizophrenia, bipolar disorder, anorexia and bulimia.
According to the report, AB 88 alone could increase premium costs by 1.7 percent to 6.5 percent a year. With total premium costs in California estimated at $40 billion, that means an additional $680 million to $2.6 billion.
But conclusions on the fiscal impact reached by an Assembly committee are substantially different. In April 1998, the U.S. Department of Health and Human Services released a report showing that such coverage of mental health treatment would increase premiums less than 1 percent each year.
AB 55, introduced by Carole Migden, D-San Francisco, and Virginia Strom-Martin, D-Santa Rosa, would open health plans to malpractice suits when they “fail to exercise ordinary care.” In addition, health plans must provide their members the chance to seek an outside review when they decline to cover a treatment.
According to the health care industry group, AB 55 could result in a 1.4 percent to 7 percent increase in premiums or $560 million to $2.8 billion annually. These costs would stem from attorney fees and damages in lawsuits that would likely follow passage of the bill.
Again, the state has reached a different conclusion. According to an analysis done by the Assembly Appropriations Committee, this bill would cost health plans about $6.5 million annually.
Court says the CAHP’s numbers are inflated, and improving “law and order” in the health care industry typically hasn’t been as expensive as the group maintains.
“Every year the same players come up with the same bogus numbers,” Court said. “Left to their own devices, they hike premiums by 10 percent a year anyway. This is such malarkey.”
But John Schneider, the researcher who compiled the numbers for the health care industry group, said the information was based on a series of independent studies by health care think tanks and other organizations, including the Kaiser Family Foundation, the Congressional Budget Office and the Barents Group.
“We do feel like the evidence is pointing to a fairly substantial increase in premiums, no matter which way you cut it,” Schneider said.
