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http://www.nytimes.com/2002/12/07/business/07CARE.html

Some Tentative First Steps Toward Universal Health Care

By MILT FREUDENHEIM

orried that the growing number of uninsured patients will undermine the nation's health care system, insurance executives across the country are pressing for new steps toward universal health care.

Many health plans are developing or offering insurance with lower premiums and slimmer coverage to attract customers who cannot afford more comprehensive policies. Executives at Blue Cross Blue Shield of Montana are pressing state legislators to raise the cigarette tax to subsidize basic coverage. Another insurer, Blue Shield of California, proposed a plan this week for health insurance for all state residents. And Dr. William W. McGuire, chief executive of the UnitedHealth Group, the largest private insurer, has written to every member of Congress calling for "essential health care for all Americans."

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Health insurers, which have long ranked high among the country's most disliked businesses, frame many of their proposals in public policy terms. But they also have strong business reasons to become involved in the debate over helping the uninsured. They want to add young, healthy members to their insurance pools to spread the cost of caring for the sick. They are also eager to add members whose premiums would be paid with tax money or government subsidies.

Several insurance executives also said pressures generated by the uninsured were raising a threat to the system that could lead to government intervention if insurers did not develop a plan first.

"If we don't do something in a darn hurry about the uninsured, the whole health care system in this country is going to collapse and the government will step in," said Chuck Butler, a vice president of Blue Cross Blue Shield of Montana. "People will say, enough is enough."

Dr. Jay Crosson, executive director of physician groups at Kaiser Permanente, the largest nonprofit insurer, said, "As insurance becomes less affordable, more and more people will be upset and frightened, and the industry will find itself drawn into the political process."

Most health insurers are thriving, keeping ahead of rising hospital charges and doctor fees by raising premiums as much as 30 to 40 percent a year for small companies and 17 percent and higher even for large employers. But the increases, combined with disappearing jobs, are leading many people to drop health insurance and, not incidentally, adding to the unpopularity of insurance and managed care companies.

Each 1 percent increase in costs adds 300,000 to the 41 million uninsured, according to the Lewin Group, a health care research organization. Many of the uninsured are young and healthy workers in small companies. When they go without health insurance, costs per person soar for the sicker people who remain.

People who need care keep the coverage like "people buying fire insurance when the house is on fire," said Randy Kammer, a vice president of Blue Cross and Blue Shield of Florida.

Some health insurers in the Southeast are finding that as many as one in 10 small-business customers are not renewing their coverage, according to Brian Klepper, executive director of the Florida-based Center for Practical Health Reform, a group of insurers, hospitals and employers.

But uninsured patients still go to hospitals, which then pass along the cost of unpaid bills in higher charges to health plans.

"The tragedy of our nation's health care system," said Dr. McGuire of UnitedHealth, "is that in spite of its many impressive features, it has ultimately failed to make even basic care consistently available to all of our citizens."

Dr. McGuire is calling for building universal coverage around an agreed national definition of what constitutes basic acceptable coverage, "based on firm evidence" of the effectiveness and cost efficiency of the care. He has written to every member of Congress and dispatched UnitedHealth officials to promote his plan in Washington, D.C., and in Minnesota and other states.

On Tuesday, Bruce G. Bodaken, the chief executive of Blue Shield of California, one of the largest health plans in the state, called for a statewide universal health care system, to be financed by employers, individuals and a new tax, which he said could be a model for the nation. More than six million California residents have no health insurance.

Mr. Bodaken said in an interview and a speech at the Commonwealth Club in San Francisco that under his plan, all except the smallest employers would be required to offer basic coverage. Individuals who could afford it would have to buy their own policies, and a new tax would subsidize those unable to get coverage.

Blue Shield has commissioned an independent study of taxing alternatives, including raising the state income tax, sales tax, a tax on health insurance premiums or hospital and doctors' fees and the tobacco tax.

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"We absolutely have to solve this problem," said Helen Darling, president of the Washington Business Group on Health, a group of large self-insured companies. "The number of uninsured will inevitably grow because of the rapid rise in health care costs. We know it's going to get much worse."

In Florida, 30 insurers, working with Tom Gallagher, the state insurance commissioner, plan to introduce several lower-cost standard and basic policies in the spring to attract small groups that have been dropping coverage. Some policies will include high deductibles and fewer state-mandated provisions like numerous visits to occupational and physical therapists, said Ms. Kammer of Blue Cross and Blue Shield of Florida.

In Montana, insurers have lined up bipartisan support in the legislature to raise cigarette taxes at next month's session to subsidize health care for the uninsured. The package includes tax credits for employers with two to four workers, coverage for schoolteachers and for more children in low-income families, as well as prescription drugs for low-income elderly people, Mr. Butler said.

Only 2.9 million New Yorkers are uninsured, reflecting the state's extensive public assistance programs. But Howard Berman, chief executive of Excellus, a Blue Cross holding company in Rochester, said that with a projected budget shortfall exceeding $6 billion, the state will be hard put to help if more residents lose their coverage.

"We need new products for middle-class people who have been priced out," he said. "And we need more efficiency in the system to reduce costs."

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