Cutler Ready For The Challenges His Term As HIAA Chairman Will Bring

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Hurricane Lili may have forced the Health Insurance Association of America to cancel its annual meeting last month in New Orleans. But one thing the powerful storm could not throw off course was the accession of Benjamin M. Cutler to the position of HIAA chairman for the coming year.

Cutler, who is chairman and CEO of Fortis Health, took over the post from J. Grover Thomas Jr., chairman president and CEO of Trustmark Mutual Holding Company.

Cutler recently spoke with National Underwriter about his new position and the pressures the health insurance industry faces.

Asked how he feels at the beginning of his one-year term as HIAA chairman, Cutler said, “Challenged is a good word to describe it.”

Having been in the business for several years, he recognizes the challenges are magnified because the industry “gets lots of media attention.” But the challenges are real, nonetheless, and they apply not only to the health insurance business, but the entire health care sector.

The primary pressure, he said, is how to make health care more affordable “when all the factors are going in the wrong direction.” Among these factors are a workforce that is aging, direct-to-consumer drug advertising, and technology.

“We have to try to get ahead of all of this,” Cutler said, “and that is the challenge the industry faces.”

Asked if managed care had run its course in terms of cost savings, Cutler said “there are many elements of the managed care revolution that have worked very well. Some excesses have been squeezed out of the system.” One example of this, he said, is the negotiation of “more stringent arrangements with providers.”

Fundamental to the industrys problems, however, is the fact that “health care economics suffers from the consumer not being involved” in the real cost of care, Cutler said. “Employers are insulating consumers.”

Whats needed, he said, is “a number of years effort to retrain consumers.” He is under no illusion, however, about how difficult this will be for the industry. “Its a huge communications job and a lot of selling and education will be needed.”

The goal is “to empower consumers with more information so they can make informed decisions” regarding health care, Cutler said. This also means, he added, getting the health insurance business “to a more normal economic model that reflects how most of the rest of the economy works.”

One thing he has learned, he said, is that intra-industry fighting has proved lethal to what the industry needs to do. This is why he regularly speaks to the heads of the other major health insurance associations. “We are far better served to work together than to fight each other.”

Regarding the 42 million or so Americans who do not have health insurance–something that has been a major preoccupation of the HIAA for several years–Cutler said he hopes the Bush health care agenda will start to be implemented next year after the elections.

He thinks the Bush plan, with its refundable tax credits”an absolutely essential element of the plan”–has traction despite the fact that the government is back in a deficit mode. It creates an intolerably costly situation, he said, when the over 40 million who dont have health insurance use the most expensive care, emergency room care, when they get sick.

He predicted that after the elections, “health care will be back on the front page.”

Other situations that need to be addressed, Cutler believed, are the adversarial relationships that have evolved between health insurers and doctors and drug companies.

“One of the interesting phenomena that came out of the managed care revolution,” he said, is that “contracting between health plans and providers has become so bureaucratic.

“Were spending billions of dollars on a myriad of contracts,” he said, “and aspects of the current model that exists between plans and providers would benefit from a close look at the bureaucracy.”

Part of what is needed, he added, is some “innovative negotiating.”

Regarding escalating prescription drug costs, Cutler said the new Bush plan to make generic drugs more available earlier is something that health insurers have been pushing the drug companies to do.

As for his specific duties as HIAA chairman, Cutler said the person in this position oversees the groups membership board and the agenda the board addresses. He also lobbies Congress when the group feels it is necessary.

His goal this year, he said, “is to ensure that the HIAA as a membership association is the best representative of its members that it can be.”

He admitted that the group has had some attrition over the years, but said, “this is not the time for companies to be sitting on the sidelines.”

His agenda is to increase HIAAs membership, now close to 300 companies. “Ill take personal responsibility for this,” he said, adding that he has “brought in two companies so far.”

A year from now, when his term ends, Cutler said he would like to see an association “with a higher level of member participation and to have the HIAA viewed as providing more value to its members.”

In this era of challenges “and politicization of health care,” he said, “companies cant sit on the sidelines. They have to be involved.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.