Zack Hutchins
Director of Communications

For Release — May 5, 1998


ALBANY — Proposed "reforms" of managed care in New York State could drive up health care costs by billions of dollars and leave thousands more New Yorkers with no health insurance at all, a new study by The Public Policy Institute says.

The cost savings created by managed care make possible health insurance coverage for an estimated 200,000 to 300,000 New Yorkers who would otherwise be uninsured, the Institute says in its report, Managing With Care.

The Institute, the research affiliate of The Business Council of New York State Inc., released the report at a news conference today in Albany.

"Experts agree that lack of health insurance usually means poorer health care," the report says. "The very last thing state leaders should be doing is driving even more families and individuals into the ranks of the uninsured."

At the behest of trial lawyers and other special-interest groups, the Legislature is considering proposals such as allowing new types of lawsuits and requiring specific forms of coverage in every health-care plan. Such new laws would drive up the cost of health care, increasing the number of employers who would be unable to provide workers with any coverage, the Institute said.

"High health-care costs are already a problem—especially in the Empire State," the Institute said. At last count, those costs were third-highest among the 50 states, and 22 percent above the national average. Largely because of our high costs, the proportion of uninsured residents rose in New York at more than four times the national average from 1991 to 1996.

Some 3.1 million New York residents were without health insurance for at least part of the year in 1996, according to the U.S. Census Bureau.

Because they make it impossible for many employers and families to afford coverage, "High costs are the single biggest obstacle to better health care for millions of New Yorkers," the Institute said.

And managed care promotes more effective use of health-care dollars for those who are insured, according to the report.

"While it's popular these days to bash managed care, anyone with actual responsibility for workers' health coverage understands why managed care is a blessing," it says. "That includes union leaders who negotiate benefits for their members." For instance, unions representing New York State employees—who have traditionally enjoyed some of the most generous benefits available—have arranged managed-care plans described as "Designed by People. Not by Bean Counters."

Promoting higher-quality care

Ironically, the various "reform" proposals arise just as managed care is proving it not only holds down costs but promotes higher quality care, the Institute said.

"Some political figures and some in the news media are acting as though managed care is bad for us—that it keeps us from getting the high-quality medical attention we need," the report says. "In fact, though, precisely the opposite is true."

For instance, managed care plans help more poor mothers in New York obtain regular care before their babies are born, and such plans encourage more regular screening for common diseases such as breast cancer and diabetes — steps that are likely to save lives, with little public fanfare.

"Because of health-maintenance organizations and other forms of managed care, we're more likely now to do what doctors have always told us we should do—get annual checkups, treat minor problems before they develop into major ones, and live healthier lifestyles," the report says. "Partly as a result of those changes, important indicators of good health are improving."

"All things considered, managed care is one of the reasons the American system of health care is, more than ever, the envy of the entire world."

Rather than passing new laws to drive up the cost of health care, the state's top health-care priority should be to make it possible for more private employers to provide coverage for their employees, the report says.

To do that, it says, leaders in Albany should consider several steps that would

drive needless costs out of the health-care system and allow employers more options in providing coverage—including a "foundation" health plan that would provide basic coverage at a lower price than is now available.

Further cost increases would hurt New Yorker's economic prospects as well as their changes of obtaining health coverage, according to the report.

"Further government-driven increases in health-care costs would make it harder to show the rest of the world that New York is serious about becoming competitive for new business and jobs," it says. "With a growth rate still lagging most other states, we can hardly afford that."

The Business Council is New York's largest broad-based business group, representing over 4,000 member companies large and small across the state. Based in Albany, it lobbies for a better business climate, and offers cost-cutting services to its members.

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Managing With Care