Is the Lone-Star State reform's last holdout? - Health Care Reform in the States: Texas

Business & Health, June, 1995 by Geoffrey Leavenworth

Despite extremes of wealth and poverty, inertia, and provider resistance, the business community, insurance industry, and state legislature are nudging Texans into managed care.

Texas represents the state of health care in America at its best. And its worst. Its major cities are home to richly endowed, distinguished teaching and research facilities, including Houston's Texas Medical Center, the largest healthcare complex in the nation and the birthplace of innovations in heart surgery, cancer treatment, pediatrics, and biotechnology. Yet its record in caring for the poor is abysmal.

The state ranks 48th in spending per Medicaid recipient. It has the second-highest rate of teenagers having babies without adequate prenatal care. One child in four lives in poverty, and nearly 22 percent of the state's 18.4 million residents are uninsured--the third-highest rate in the nation. A study by healthcare consultants Lewin-VHI ranked Texas eighth among the states for the severity of health-care ills.

Complicating the dichotomy between well-to-do and indigent and urban and rural is the state's conservative, slow-moving approach. While a number of states have developed a plan for health-care reform, change is happening cautiously and piecemeal here.

Predictably, those who benefit from the advanced medical care available in the state's largest cities--Texans who can afford the self-referral, high-tech procedures, and state-of-the-art hospitals as well as those who work within the system--have resisted change. Why tamper with something that works, they seem to be asking.

The system doesn't work nearly as well for poor Texans, of course, particularly those who live in Carson County or any of the other 25 counties that have no licensed physicians. While progressive concepts like universal coverage have been kicked around--a task force appointed by then-Gov. Ann Richards (Dem.) recommended public health insurance for kids in 1993--such proposals went nowhere. And today's conservative administration, headed by Republican Gov. George W. Bush, has shown no interest in pursuing them.

The legislature is confronting a number of other health-care measures, though: regulation of managed care, an issue that's pitting the business and insurance industries against the medical community; small-market reform; and the Medicaid dilemma.

THE INFLUX OF MANAGED CARE

Until recently, many of the state's large, profitable corporations offered generous benefit plans that supported the relatively lavish health-care system and were tolerant of steep cost increases. But they've finally begun to balk. In championing managed care to cut costs, they're clashing with physicians, whose resistance is reflected in a recent issue of Texas Medicine, the journal of the Texas Medical Association: "Nobody talks about medicine," the cover decries, headlining a series of profiles of disillusioned doctors. From their perspective, at least, the situation will only get worse.

In 1994, less than 10 percent of Texans were enrolled in HMOs, about half the national average. But the pace has picked up, with the state's metropolitan areas becoming a hotbed of managed care activity.

"While penetration is very slow in some areas, it's in hyperdrive in places such as Houston," says Louis J. Goodman, director of medical economics at the 30,000-member Texas Medical Association. And Bill Parham, manager of corporate benefits at Tuboscope Vetco International, a pipeline inspection and coating company with 2,000 employees, says his Houston-based company uses managed care extensively there. "But in the Midland-Odessa area, where the company also has a concentration of employees, they fiat out don't have managed care," he reports. "We have to use straight indemnity coverage there."

Goodman, like many others in the medical community, has misgivings. "How do you maintain research, teaching, and medical advances in a system whose goal is to cut costs?" he demands. "Who's going to pay?" Some small-businessmen, like Don Summers, president of the 16-employee Austin Welder and Generator Service Inc., are fearful, too. Noting that managed care has been slow to catch on in Texas because of the strength of the doctor-patient relationship--it's "like a long courtship," he says--Summers acknowledges that HMOs work reasonably well for young, healthy employees. But "a certain percentage of older people require chronic care. HMOs can make it difficult for patients who need the care of specialists on a frequent basis."

Few large employers share that view. "We think managed care plans are good, not bad," Nancy Sims, a lobbyist for the Texas Business Group of Health--which represents corporate giants like Fort Worth-based American Airlines and Houston-based Compaq Computer Corp.--told The Wall Street Journal last month.

THE BATTLE MOVES TO THE LEGISLATIVE FRONT

Less accustomed to dealing with managed care organizations than their colleagues in other states, Texas physicians have also balked at some of the methods used to regulate utilization and practice patterns. Organizations representing doctors, chiropractors, and other provider groups have lobbied strenuously in support of a bill now before the state legislature. Known as the Patient Protection Act but often called the Doctor Protection Act by opponents, it has sparked a confrontation that some observers describe as "a battle of the titans." By most accounts, the insurance industry is winning.