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Would You Believe A Premium Hike Of 30 Percent?

MANAGED CARE June 1998. © MediMedia USA
News and Commentary

Would You Believe A Premium Hike Of 30 Percent?

MANAGED CARE June 1998. ©1998 Stezzi Communications

Barring a sudden economic downturn or a major international crisis, managed care reform legislation is likely to dominate Congress in the precious few weeks between summer recess and Election Day.

The American Association of Health Plans has joined the fray, warning of extreme economic consequences if four major aspects of reform legislation become law. AAHP released a Barents Group/KPMG Peat Marwick study that analyzed not specific bills, but provisions — some or all of which are part of each of the major reform proposals in Washington. The report suggests that if you think this year's relatively small premium increases were cause for concern, you haven't seen anything yet.

The study found premiums would rise between:

  • 2.7 and 8.6 percent if health plans are exposed to greater malpractice liability
  • 2.2 and 6.9 percent if utilization review is deemed to be a medical decision
  • 4.1 and 6.1 percent if plans are prohibited from determining medical necessity
  • 6.6 and 8.6 percent if plans are required to allow any willing provider — "willingness" means the provider agrees to go along with the rules of the health plan — to give care

When all of these factors are taken together into a worst-case scenario, the result could be a premium hike of more than 30 percent. Barents derived its estimates from Congressional Budget Office projections.