How Maryland Got Health Care Reform


Just as a groom's family usually sits to one side of the church and the bride's family to the other, so it was in the House Economic Matters Committee this past legislative session.

There, Chairman Casper R. Taylor Jr., a former tavern owner from Allegany County, spent the session trying to marry up the disparate parties of Maryland's health care industry in the hopes of producing an acceptable health care reform bill.

On most days, the insurance lobbyists sat on the right side of Mr. Taylor's hearing room, representing large and small commercial insurers, the state's two non-profit Blue Cross and Blue Shield plans and an assortment of health maintenance organizations (HMOs).

A bigger group sat to the left. They were the lobbyists for the "health care providers:" the state medical society; specialty physicians such as anesthesiologists, pathologists, emergency room doctors and pediatricians; dentists; nurses; the Maryland Hospital Association; the Johns Hopkins Hospital; pharmacists; drug manufacturers; psychologists; and chiropractors.

Hovering somewhere in between were the match-makers: representatives of the Chamber of Commerce, of organized labor, of small businesses, of insurance brokers and agents, the state health department and the staff of Gov. William Donald Schaefer.

Many of the parties didn't want to be there, but with so much at stake, none of them could take the chance of not being there.

In the end, it was a shotgun wedding. The two sides were pushed together out of (political) necessity, but essentially against their will.

Now, like so many expectant parents, the health care and insurance industries are nervously waiting for Gov. William Donald Schaefer to make the critically important appointments to the powerful seven-member commission that will implement the new health care reform law. A decision is expected this coming week or the next.

Had it not been for a fortuitous confluence of events, the marriage might not have come off at all. When the session started, hardly anyone thought such a union was possible. Many of the parties were happy going it alone; and some were afraid of what marriage might do to their free-wheeling ways. Others, however, saw the benefits of settling down to a more rational health care system.

Doctors agreed the high cost of health care was a problem, but said the fault was not theirs alone and that capping their fees would only drive physicians out of Maryland.

Emergency room docs, weary of being sued, pushed for a provision to protect them from malpractice claims, arguing that the mere threat of such litigation prompts unnecessary procedures that drive up the cost of medicine.

Any such protection, of course, made lawyers angry. Pity the poor patient, they said, who might not be able to sue a doctor who did something wrong.

Insurance companies didn't want change, either, unless the legislature forced all insurers to change at the same time. After all, they had perfected a profitable system in which they insured the healthy and excluded the sick.

Smaller insurers were worried about being squeezed out of the market by a system that would spread the insurance risk among all policyholders and which, proportionately, could saddle them with more risk than they could handle.

Insurers large and small were concerned the legislation would push premiums so high so fast that consumers would be hit with "sticker shock" and back away from buying any insurance.

Blue Cross lobbyists saw the health insurance reform part of the bill as an opportunity for the Blues to get back to what they were originally set up to do: provide insurance, rather than administer the self-financed insurance policies of others.

HMOs, beneficiaries of the trend toward more cost-controlling "managed care," massaged the process to minimize some of the underwriting advantages that traditional insurers had over HMOs. The result was that HMOs were left in a more favorable competitive position.

Psychologists worried that the new standard benefits package insurers would have to offer small companies would not include sufficient coverage for mental illnesses. They, like the doctors, said their primary concern was for the patients. But a reduction in insurance coverage also would mean a decrease in demand for their services, a direct hit to their pocketbooks.

Chiropractors fought to be included anywhere in the bill, similarly hoping to assure their future business.

The hospitals, whose costs are already controlled by a state regulatory commission, played the role of adviser and interested observer, prodding the process along in the hope that increased availability of health insurance, at the least, would cut down on the amount of charity care they now provide.

Organized labor and big business, adversaries on so many other issues, continued to share their mutual concern about runaway health care costs, which have eaten into worker paychecks and company bottom lines.

Small businesses were especially interested because they are less likely to be able to afford to insure themselves, and under the current system often cannot obtain or afford health insurance for their workers.

With so many different and often competing interests at stake, here's how Delelegate Taylor brought it off:

* The atmosphere for change was right, primarily because of the national interest in health care reform created by the Clinton administration. Mr. Taylor's own committee had struggled with health care and insurance reform the two previous years, so the concept was not new to them.

* Mr. Taylor's own personal ambition to become the next speaker of the House also was a driving force. To push health reform through to passage clearly would put a star next to his name.

He did it with a textbook example of consensus building, inviting the representatives of the many interests affected to participate directly in the drafting of the legislation. In work session after work session, the lobbyists stood up in public and told Mr. Taylor's committee what they thought. Sometimes they made their point; sometimes they didn't; but, for the most part, it was done in the open.

* The General Assembly had no other high-profile item on its plate this year, so legislative leaders were looking for an important issue to get behind. Because of the lingering effects of the recession, there was no money available for new spending initiatives, so the issue had to be essentially expenditure-neutral.

Moreover, the lawmakers were looking for something positive to do that might erase the nagging memory of the bitter tax and budget-cutting battles of the first two years of the term. And because next year is an election year, a time when lawmakers try to avoid making waves, 1993 was probably their last opportunity this term to do something truly bold.

* There was political muscle behind the move. Governor Schaefer was pushing for changes in insurance practices, and so was House Speaker R. Clayton Mitchell Jr., a conservative in search of ways government and businesses could save money on health care.

At Mr. Mitchell's direction, a subcommittee from the Environmental Matters Committee worked with Mr. Taylor's committee in drafting the bill, eliminating a turf battle between the two committees that could have sidetracked it.

* The powerful medical society lobby was disorganized and slow to react. Just before the session, it fired lobbyist Gerard E. Evans and replaced him with former Gov. Marvin Mandel, but the physicians missed some of the early work sessions before Mr. Taylor's committee or were slow in responding to provisions affecting them.

Although other lobbyists were aware the committee planned to add a provision to cap doctors' fees, the physicians were caught by surprise and lost an opportunity to stave off the amendment.

At a critical juncture late in the session when a House-Senate conference committee was working late into the night ironing out the all-important final compromise, the medical society was about the only major player unrepresented.

The next day, the doctors refused to join a coalition of health care providers opposing the final bill, concluding it was politically unacceptable for physicians to be seen as opposing health care reform.

Their efforts were further thwarted by the revenge factor. Mr. Evans not only was hired by Blue Cross to push for passage of the bill, he also had the ear of his close personal friends from Prince George's County politics, Senate President Thomas V. Mike Miller Jr. and Senate Finance Committee Chairman Thomas P. O'Reilly.

Many of the legislation's provisions to regulate doctors' fees and services and to tilt Maryland's health care system toward HMO-like managed care were positions advocated by Mr. Evans and espoused by Mr. O'Reilly.

* The Senate got on board. Initially, Senators Miller and O'Reilly took a "let's let Washington do it" attitude. But as the measure gained momentum in the House and press coverage expanded, they changed their tune. Amendments pushed by Mr. O'Reilly substantially transformed the final bill and left it with the Senate's imprint. But had he opposed it, the bill would not have had a chance.

Now the marriage has been made, and the prospects of divorce seem unlikely.

The question is, what will all this mean? How will it work? Will it work?

The answers will be years in coming. They will depend on the abilities and performance of the new commissioners and of John M. Colmers, the hospital commission regulator who was transferred over to become the new Health Care Access and Cost Commission's first executive director.

The answers also will depend on what the data collected by the new health care commission eventually show and how far the commission will be willing to go.

What will be included -- and excluded -- from the standard benefits package insurers will be required to offer? Will premiums go up or down, and by how much? Will small employers buy the new policies for their workers?

Will a "community standard" in malpractice cases reduce the frequency and cost of such litigation, or will patients who have been wronged find it impossible to sue their doctors?

And how far will the commission go in regulating the services health care providers render or the rates they may charge?

"I think the fundamental sea change this legislation imposes is in the area of price controls -- the ability of the commission to, in effect, determine provider prices. Ultimately, that can have a very beneficial effect," said Bryson Popham, a lawyer who represented insurance agents and brokers during the health care reform debate.

"But that can be a double-edged sword. Price control in one area can easily move to another, and we should be very cautious about such things."

NB John Frece is chief of The Baltimore Sun's State House bureau.

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