Survey: managed competition favored as a reform model - highlights of the Washington Business Group on Health's survey results

Business & Health, Sept, 1993 by Karen A. Milgate, Stephanie L. Poe

WBGH members believe private industry can do a better job than government of selecting and managing health plans.

Large U.S. corporations overwhelmingly endorse managed competition as the preferred model for national health care reform, a survey of 76 such companies shows. Given three options, eight in 10 say it's the reform direction they favor most; only 4% chose a "pay or play" model as their first preference and none chose a single-payer or Canadian-like system.

Such strong support for managed competition is not surprising since more than nine in 10 survey respondents-all large corporations that are members of the Washington Business Group on Health (see "Survey methodology," page 32)-say that private industry could do a better job than government in selecting and managing health care plans. Most managed competition proposals retain such a role for private employers. "Health care reform did not start in Washington, or with this current debate," says David Scherb, vice president of compensation at Pepsico Inc., in Purchase, N.Y., and chairman of WBGH's board of directors. "It started with the business community's work in how to provide acess to the quality care that our employees demand at costs that companies can afford."

Employers appear to want to continue what they started. Survey respondents express strong support for a health care market in which large and medium-sized employers would continue to purchase care largely on their own. Eight in 10 (83%) favor a system in which health insurance purchasing cooperatives (HIPCs), also called health alliances, would be established for employers with fewer than 100 employees. Only 12% of respondents favor an approach that would require all employers in a given area to purchase care through a single HIPC. About two-thirds (68%), however, agree that large employers should be allowed to join small-employer HIPCs on a location by location basis.

Despite the clear desire by employers to retain the power to buy health care, a sizable minority express some boubt about the necessity of continuing employment-based health insurance. When asked to rank the importance of maintaining an employment-based system, 58% of respondents said it "must be" retained. But one in four respondents say retaining an employment-based system was negotiable and one in six (16%) said it is not necessary to retain such a system. On the related issue of self-insurance, 67% said that large employers "must retain" the ability to self-insure, 21% said it was negotiable, and 9.2% said self-insurance need not be retained.

WBGH believes these results may mean that the depth of large employers' support for private sector selection and management of health plans is contingent upon how their role as purchasers would be redefined in a reformed system. Employers might not want to participate as activity in managing health care if current incentives are altered significantly.

Another reason companies support managed competition, WBGH believes, is that if offers the best opportunity for reforming the way health care is delivered. It will push providers to deliver more cost-effective care by developing organized and managed systems. More than 90% of respondents say that government policy should encourage the use and development of organized systems of care. (WBGH is a strong advocate of such systems.) Also, 82% say that consumers should be required to use cost effective providers when they need expensive care.

Employers have mixed feelings about federal regulatory control over a competive health care market. They prefer that the federal government set the rules of health reform rather than the states (76% vs. 16%; 8% did not answer the question.) Many employers, however, don't favor a government mandate that they provide health insurance and pay for a share of it. Only 18% strongly favor such a mandate, and 29% favor it; 25% are opposed, 18% are neutral, and 9% did not answer the question. In contrast, almost two-thirds (65%) say they favor a federal requirement that individuals be mandated to obtain health insurance.

Employers overwhelmingly favor havingg the federal government fold Medicare and Medicaid into a reformed health care system. WBGH members believe it is critical for Medicare and Medicaid to be included in reform as a way to eliminate cost shifting, ensure cost effectiveness in the system as a whole, and improve the overall health of the nation's economy.

At the same time, employers don't want the government interfering with competition in the market. Specifically, they largely oppose price controls and national health care spending limits. Almost all (93%) favored competition among health plans and organized systems of care as the principal means to control health spending. Support was much lower for controls on providers' fees (22%) and controls on premium increasess (25%). While 24% of respondents supported national spending limits, a significant percentage (33%) were neutral.

WBGH members appear to join in the chorus of support for a standard benefits pacakge. But they express mixed views about how comprehensive these should be. Among respondents, 30% prefer a basic package with limits on certain benefits, such as mental health care, 55% favor a benefits package that offers comprehensive benefits, and 8% favor a standard package that would include only catastrophic coverage.