Posted on: Thursday, February 14, 2002

ISLAND VOICES
Medical regulation can't work

By Cliff K. Cisco
Senior vice president of HMSA

This year, lawmakers are turning their attention to the rising cost of healthcare. This important issue has been troubling Hawai'i and our nation for a long time now.

Meaningful and prudent action is long overdue. Yet, misguided proposals of increased government regulation will do nothing to solve the root causes of rising costs: expensive new technologies and pharmaceutical products, an aging population with a high demand for services, and the pressure on the private sector to fund the shortfall of government health programs.

One current proposal is the creation of a government-mandated process to control all health plan rates. Health plans like HMSA set rates by prudently balancing the legitimate needs of all stakeholders — members, employers and healthcare providers. The process requires sophisticated analysis to best approximate current health risks and future use of medical services.

The integrity of this process is critical if a health plan is to remain financially viable and able to continue serving the community. In addition, health plans must operate within the strict and complex web of existing government regulation.

It is impossible to believe that a government agency has the resources and expertise to pass judgment on every contract between an employer and a health plan in this state. This legislation creates a system of artificial rate controls that will do little to address inflation and has the potential to damage the community-based institutions that provide us with our healthcare coverage.

For this reason, we have asked legislators to vote "No" on the proposed regulations.

The discussion at the Legislature concerning rate regulation is being muddled by testimony from the state's Insurance Division. The insinuation is that health plans have clandestine schemes for rate-making that call for government "oversight." The fact is that current statutes provide the division with unlimited oversight. The insurance commissioner regularly sends auditors to review health plan operations.

In the last two years, auditors from his office spent 2,000 manhours at HMSA examining, among other items, HMSA's rate-making processes.

We applaud our public leaders who believe rising healthcare costs are a problem. Like the rest of the community, we long for relevant actions. For example:

Everyone knows that an ounce of prevention is worth a pound of cure. Hawai'i could do a much better job improving health education and access to preventative services. HMSA itself has a number of programs that provide disease management, pharmaceutical management, healthy aging and more for our members. We fully support the expansion of government efforts to do the same.

Also, healthcare providers have testified that Medicaid reimbursement levels do not cover the costs of providing care for Medicaid enrollees. Healthcare providers have no other option but to look to the private sector for increased reimbursement to compensate for the government shortfall. This in turn puts pressure on the health plan rates paid by Hawai'i's employers.

Another idea is to provide more support to the "safety net" of community clinics and hospital emergency rooms that provide most of the care needed by the growing number of people who have no healthcare coverage. We believe the solution can be found when the public and private sectors work in partnership to create innovative solutions.

The private sector alone — nonprofit organizations, community groups, healthcare providers, community health centers, private philanthropy and others — cannot continue to shoulder such a large burden. The participation of the Legislature is essential to such an initiative.

Throughout our history, the people who live in these Islands have adapted to meet the needs of the community. We have created traditions and institutions that reflect the will of the community. This is not the time to tear down community institutions. We need better ideas than more regulation.

Now is the time to build on our successes and focus on our collective future with thoughtfulness and creativity.