CALIFORNIA: INITIATIVES’ OPPONENTS RELEASE HMO STUDY
A group opposing California's upcoming ballot initiativesThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
that aim to tighten regulation of the managed care industry
released a study last week showing that the measures would cost
the state "between 27,000 and 60,000 jobs and lead to sharply
higher medical insurance premiums," LOS ANGELES TIMES reports.
The study, funded by Taxpayers Against Higher Health Costs, and
conducted by Washington-based Barents Group, an economic research
unit of KPMG Peat Marwick, is one of the "first shots in what is
expected to be an intense battle over two competing versions of
HMO regulatory initiatives" on the November ballot. The study
found that the measures could raise medical premiums "as much as
14.5%" and cost employers in the state "between $1.3 billion and
$2.7 billion" next year. David Gross, a Barents health economist
who headed the study, said, "The initiatives would severely
restrict health plans' use of tools that reduce costs and control
TAKING SIDES: The HMO industry said the measures, which
supporters claim would "protect against excesses by HMOs"
including "gag" orders and exorbitant physician profits, would
"dramatically expand government's role in health care and impede
HMOs' ability to control health care costs." But supporters of
Proposition 216 and Proposition 214 said consumers need the
measures to protect them from "abuses" such as "fees imposed on
hospitals that restructure and on" other health care mergers.
Robin Kane, a spokesperson for Proposition 214, called the
study's results "outrageous," adding that it "failed to account
for [a] significant difference between the two initiatives" in
terms of costs. Harvey Rosenfield, an author of Proposition 216,
said, "It's the same old story of the powerful HMOs and insurance
companies trying to distract voters ... with a phony study
concocted by industry hacks and pseudo-economists."
DUPLICATE: The HMO industry said the two ballot measures
are "unnecessary" because they partially duplicate "existing
regulations or pending legislation" that include a ban on gag
clauses. HMO executives said "the Legislature, not the
initiative process, is the proper arena to regulate the industry"