Area Employers Want U.s. To Help Control Rising Costs

Posted: June 18, 1990

Employers in the Delaware Valley want the federal government to help control soaring health-care costs, but they do not favor a national health plan, according to a recent survey by the consulting firm of Towers Perrin Co.

Nearly half of the 123 executives surveyed said government should encourage competition among health-care providers. Some even blamed the current spending crisis on a "lack of competition."

At the same time, 45 percent of those surveyed recommended regulating the fees of hospitals, doctors and other health-care providers, suggesting more of a regulatory or public-utility approach to managing health costs.

Towers Perrin's Greg Mazol said, "I think maybe we have had the wrong kind of competition, and that's why costs have continued to go up. I'm not convinced that a true competitive model won't work."

For that to occur, Mazol said, employers must get more involved in managing how they purchase health care for their workers. He said he was "encouraged" by answers to another question that indicated executives intended to take a more aggressive role in the next five years in negotiations with HMOs.

"HMOs cover so many Delaware Valley employees - about 1 million workers and dependents - they are a major player in the health-care delivery system," he said. "Therefore, they represent a significant expense that needs to be managed as carefully as any other."

Mazol works at Towers Perrin's Philadelphia office as head of the section handling health and welfare benefits.

More than 80 percent of senior executives surveyed said rising medical expenses posed a threat to their companies' financial results. Only 2 percent expected the situation to improve substantially in the next five years.

More evidence of growing concern: Nearly one-third of the employers surveyed who deal with unions said there was a good chance they would face a strike over medical benefits in their next negotiations.

"It is significant to me that they are saying that (rising medical spending) is threatening their bottom lines. That is a change from the past," Mazol said.

Nevertheless, fewer than 20 percent of the executives surveyed supported national health insurance, and 12 percent said they favored no government involvement in the effort to contain costs.

"It seems to me the fear with national health insurance is that people fear that it's going to result in poor quality," Mazol said.

"By the same token, people point to Canada and say we should have a system like they have, which is certainly national health insurance. I don't think there is any evidence that the quality of medical care in Canada is inferior."

Towers Perrin is a nationwide management consulting firm that specializes in benefits and compensation.

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