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December 3, 2001

Health insurer: Business can help control health costs—by intensifying involvement

Costs of health care and health insurance are increasing in double digits again this year, and that trend is likely to continue, if not worsen, in the short term, one of the leaders of New York's health insurance industry has told Business Council leaders.

Business can begin to reverse the trend and help improve health-care costs and systems by becoming actively involved and embracing four key principles, added Howard Berman, president and CEO of Excellus, Inc., a diversified not-for-profit health-care company that operates Blue Cross and Blue Shield companies in Rochester, Syracuse, and Utica, and Univera in Buffalo.

Berman, a member of the board of directors of The Business Council, gave a talk entitled "The Rising Costs of Health Care: Causes and Challenges" at the Nov. 13 "Issues Conference" of The Business Council's Government Affairs Council (GAC).

How business can help contain health costs: The ongoing escalation of health-care costs partly reflects too little involvement in health-care planning and decision-making on the part of both the business community and individual communities, Berman said in remarks prepared for his presentation.

"We have taken the easy road, relying on the promise of information technology and the delegation of our instructions to others to solve the problem," Berman said. "The data shows that both approaches have failed."

Health insurers can't control many of the health system's costs without more active and real business support, Berman said. In particular, business must "embrace and publicly advocate certain principles that will redefine how care is provided," Berman said. The four key principles are:

Business can support these principles by rewarding enterprises that support them and opposing those that don't, Berman said. Specifically, business groups can do this with their rhetoric, with their support or opposition to health-care providers' capital requests or government programs, and with support for health insurers' pursuit of cost-management initiatives.

Active, consistent business support of this kind could bring significant improvement to health care within three to five years, Berman said.

Factors contributing to escalating health costs: Berman said there are many factors contributing to escalating health costs generated by hospitals, doctors, and drugs. He highlighted some of the "drivers" behind the cost escalation:

"Most importantly, there is nothing in the current environment that has the power to change any of these relationships," Berman said. "In fact, over the near term, things may even be tougher."