Welcome to The Healthcare Forum..

Fractal Creations by Garrett W. Griggs

Karen Olson's, President of Benefits Design Group, Inc.,
Testimony on Blue Cross Rates for New York Feb., 1995:

The Healthcare Reform Forum is offerred as a meeting
place for healthcare advocates and primary medical professionals
involved on the "front lines" in delivery of community health care
in New York City.

Medicaid funding is "on the table" for reductions by both Feds & NYS.
We invite your comments, both on strategies to save funding & methods
for more cost effective delivery of vital medical services.

ALERT!

The new insurance Commissioner, Edward Muhl has issued notice that ALL
NYS insurance regulations issued since 1939 are "on the table" for
review by the new administration.  Public comment period expires
2/27/95.  We will have more info in a couple of days.

Blue Cross Public rate hearings are scheduled for Feb 16 & 17!

    NYU Medical Center, Farkas Auditorium
    530 1st Ave. @ 32 St.-NYC
        Thursday, Feb. 16, 10 am

               AND

    Mid-Huson Library Auditorium
    105 Market St., Poughkeepsie
        Friday, Feb.17-10 am

To testify, you must register in advance by calling 800-771-7721

Background:

Blue Cross has filed for an average increase of 21.4% on all
community-rated contracts; i.e. individual & small group.  The increase
for individuals will be as high as 42%!  Blue Cross has also recently
announced their withdrawl as "inssurer of last resort" & ceased the sale
of individual reimbursement medical plans to individuals.

Without further health reform in NYS, there is no insurance at any price
for individuals and small businesses with less than 3 F/T employees.
Unless the rest of the medical insurance companies are required to
"share the load" by insuring individuals and sole proprietors, along
with Blue Cross, there will be no medical insurance available to
individuals in NYS.



                 TESTIMONY ON BLUE CROSS RATE APPLICATION
                    Public Hearings - February 16, 1995
                   by Karen Olson, CLU, ChFC - President



Benefits Design Group is an independent broker specializing in employee benefit
plans for small businesses or  organizations ranging in size from five to five
hundred employees. Close to half of our clientele are not-for-profit
organizations.

Medical insurance business represents about 40% of
our gross revenue.

In 1991, we testified about the importance of Empire Blue Cross as
"the insurer  of last resort."

We cited many clients referred to Blue Cross at no commission payment to us,
because of Empire's special position as insurer of last resort.We
recognized the genesis of Empire's financial crises and aggressively
supported the New York State Health Reform Act of 1992.

HR '92 was enacted by the New York State Legislature, largely to redress
the Empire Blue Cross financial crisis.  In 1992 the Governor, the
Insurance Commissioner and the Legislature recognized commercial medical
insurance industry practices as responsible for Blue Cross problems.
Commercial insurers were medically underwriting to exclude all but
the healthiest New Yorkers and driving away their sick policyholders
with rate renewals based on medical claims.  Blue Cross was the insurer
of last resort for individuals and small groups with medical problems as
well as whole industries considered undesirable by the commercial
industry.

We salute the New York State legislature for the Health Reform Act of 1992 and
congratulate the New York State Insurance Department for clearly drawn
and aggressively enforced regulations.

All commercial medical insurance carriers in New York State were required to of
fer their small group product, community-rated to all business groups
down to 1 person sole proprietors unless they filed a separate product
for all individuals regardless of employment status.

HRA 1992 also created a mandatory risk sharing "pool" to equalize risk amongst
insurers on individual and small group business.

In early 1993 a variety of mechanisms were employed by commercial insurers to a
void the small end of the market including:

                      . Volume discounts
                      . Monthly administration fees
                      . Minimum size requirements making small group
                        product available only thru unanswered 800 #'s
                      . Denial of broker's commission on "undesirable business"


The New York State Insurance Department addressed most of these abuses thru
Amendment 1 to Regulation 146.

As a result of the HRA '92 and its enforcement, a competitive market developed.
Most commercial carriers worked in "good faith" to comply with New York
State law, resulting in a competitive medical insurance market place in
New York State by year end 1993.

Some creative cherry-picking practices survived eg. US Healthcare requires age
census, industry and medical information prior to accepting applications
for small group insurance and subjects all New York State Small Business
groups to underwriting approval. Groups deemed undesireable are offered
only their worst plan with no prescription drug coverage.

By mid 1993, unfortunately, 2 commercial insurance companies filed suit to
avoid the New York State Statute.

     Chubb Life sued New York to avoid insuring under any circumstances
groups of fewer  than 3 people.

     Travelers filed a Federal ERISA suit to avoid New York State risk
pooling and hospital reimbursement  rules.

Chubb's successful lawsuit totally eliminated any competitive market for
insurance for individuals and very small groups.  Once more, Blue Cross
became the insurer of last resort.  Although New York State passed a
statue mandating a level playing field, 2 insurance companies managed
to subvert the law and all commercial insurers fled the field, lest they
be left standing alone, in the position Blue Cross occupies once more.

As of the end of November, 1994, Blue Cross suspended new issues on their
individual policy, leaving individuals in New York State with no major
medical product available at any price.

All HMO products available in New York State to individuals exclude
prescription drug coverage.  This total lack of comprehensive coverage
extends to all 1 & 2 person businesses in the State, imposing an
impossible burden on the small business community.

We are very concerned that the new administration's anti-regulatory
fervor will extend to the Insurance Department.

In the insurance business, regulatory enforcement is desperately needed by the
best and most socially responsible players in the industry.  If
government does not require the sale of individual medical insurance
policies as the price of doing business in New York State, no
company (no matter how compassionate) can afford to offer a product
-- Not even  Blue Cross.

If  New York State does not remedy the situation, thousands of New Yorkers at
all income levels will be uninsured.

-  The sick ones will be added to the Medicaid roles.

-  Middle class families will be bankrupted to qualify for Medicaid through
   no fault of their own.

-  All attempts by the new administration to cut Medicaid costs will be
   frustrated by the resulting influx of disproportionately sick
   and expensive Medicaid patients.

-  The real tragedy will be the loss of healthy premium paying lives from the
   New York State insurance pool.  The loss of premium support by
   healthy insureds creates an irresistible financial spiral making
   the delivery of medical care to the sick population
   prohibitive, no matter who is paying the bill.


If the commercial insurance industry cannot be made to insure all willing
insurance buyers, a New York State single payor insurance system will
ultimately be financially necessary.

Remedies Needed:

1. The New York State Legislature should pass amendment legislation
   clearly imposing a statutory requirement on all medical insurance
   companies to issue to individuals.  The New York State Legislature
   should amend Article 44 to specify that HMO policies excluding drug
   coverage do not meet the "comprehensive medical care" requirement of
   the law.

2. The New York State Insurance Department should file for an ERISA
   waiver to extend regulatory oversight to self-insured plans.  At
   minimum these plans should be answerable to some audit authority for
   solvency.  The Federal Government has never established a unit for
   audit review and enforcement on non-pension welfare plans.

3. The New York State Insurance Department should file for an ERISA
   waiver enabling the State to establish the risk sharing pool, as
   intended in the 1992 Statute.

" The other side of that coin, of course is the unwanted
treatment imposed on patients against their & families will
because insurance DOES pay."

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Fractal Creations by Garrett W. Griggs

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