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HIAA Says 5-Step Plan Would Cut Health Costs By $250 Billion Annually

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Health care costs could be cut by some $250 billion annually through the adoption of a five-step cost containment strategy, says the Health Insurance Association of America in a new report.

“There is a path to significant savings if we have the political will and the commitment of all parties in interest,” said Donald Young, president of the Washington-based HIAA, at a press briefing.

Everyone involved in the health care financing and delivery system, he said, including patients, providers, purchasers, payers and policymakers, has an essential role to play in getting health care costs back under control.

According to HIAA, reducing legislative and regulatory burdens on health insurance could save between $20 billion to $25 billion, annually. The report says cumbersome government regulation includes benefit mandates, onerous prompt payment rules and a wide range of administrative requirements.

In particular, HIAA says, some 1,400 state benefit mandates now exist, a 40-fold increase over the last several decades. These mandates, HIAA says, increase the cost of health care, making it disproportionately more expensive for small employers.

Mandates also stifle innovation and hinder the ability of insurers to respond to consumers, HIAA says.

Second, HIAA says, medical malpractice reform could save between $78 billion and $133 billion annually.

In addition to rising medical malpractice insurance rates, concerns about being sued permeate the practice of medicine today, HIAA says, encouraging defensive medicine. HIAA says a nationwide academic study found defensive medicine by itself costs $50 billion yearly.

Third, HIAA says, the nation could save up to $100 billion annually by increased development and dissemination of scientific medical standards and by independently evaluating the effectiveness of emerging technologies.

HIAA says that in the current information age, commonly accepted medical practice standards can become questionable or obsolete very quickly.

Providers, HIAA says, must acquaint themselves with the results of clinical trials related to new technologies and techniques.

In addition, the continued overuse, underuse and misuse of health care resources must be addressed, HIAA says.

Fourth, HIAA says, unquantifiable savings could be achieved by giving patients more control over their own health care decisions.

Consumer-directed health plans emphasize wellness and prevention and give consumers a greater stake in health care purchasing decisions, HIAA says.

Finally, HIAA says some $15 billion in savings also could be achieved annually by ending cost shifting from public health insurance programs.

Bill McInturff, a partner with the polling firm of Public Opinion Strategies, told the press briefing that controlling health care costs is viewed as the top health care priority among both privately insured adults and adults in general this year.

Some 39% of adults with private health insurance in a recent survey cited cost control as the number one issue for Congress and the President to address. By contrast, only 23% cited reducing the number of uninsureds as the number one issue, McInturff said.

Only 5% cited passing a patients bill of rights as the number one priority, he added.

Young noted that many of the Democratic presidential candidates have raised health insurance as an issue, but so far, their plans have been very sketchy.

One encouraging sign, he said, is that the plans build on the employer-based system. However, Young added, it is disturbing that many of the plans also include expensive mandates that limit innovation.

Reproduced from National Underwriter Edition, June 9, 2003. Copyright 2003 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.


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