Federal Health Care Reform: Suddenly, 1996 Is a Winner

Only a month ago, health care reform appeared to be withering on the Washingtonian vine. Since then, however, President Clinton has signed into law a bill making it easier for workers to get health coverage when they move to a new job. And by the end of this week, the president promises, he will have signed two important health insurance reforms that Congress approved Tuesday.

The first will grant most working Americans the same level of coverage for mental health that they now enjoy for medical and surgical services. The second will guarantee 48-hour hospital stays for new mothers and their infants (and 96-hour stays for women undergoing C-sections).

Moving this legislation through Congress was no mean feat. Many initially dismissed it as unnecessary and too expensive. Then Sen. Edward Kennedy (D-Mass.) threatened to stage a filibuster that would have cast the Democrats as champions of mom-and-apple-pie health reforms--reforms that had in fact been authored and supported by members of both parties. After that, the legislation advanced.

Winning passage of these reforms, the most extensive in a decade, has been a struggle for supporters, but even greater challenges lie ahead. Between now and Jan. 1, 1998, when the reforms take effect, employers, health maintenance organizations and hospitals will have to find ways to implement them while preserving the cost controls that in the 1990s have enabled managed care to curb the steep rise that gathered momentum in the 1970s and ‘80s.

Susan Nestor, the executive director of Blue Cross-Blue Shield, for example, says cost containment will be difficult because the reforms “take away all the tools that private health plans have to deliver low-cost, high-quality care.” Nestor is particularly concerned about the expansions in maternity benefits, but several studies have shown that they would increase costs by no more than 12%. Those costs, moreover, could be offset by a reduction in the expensive emergency room visits that often result when doctors and nurses are not given sufficient time to monitor the health of infants and new mothers before releasing them.

The pressure of controlling costs associated with the second requirement--that employers offer the same caps on coverage for mental and physical health--will be eased by a rider in the legislation that says the parity rule can be dropped if a firm’s premiums rise more than 1% because of the implementation of the new caps. The legislation also preserves the authority that employers and insurers currently have to determine which kinds of mental illness should be covered.

Employers and insurers need to use their authority wisely, distinguishing between the “worried well” and the seriously mentally ill. If implemented properly, the parity provision could help those families in which financial resources have been exhausted by the costs of treating a family member whose mental illness is not covered by health insurance.

As Kennedy said during the debates over parity, “The financial burden that falls on a family is no less crushing when the disease is schizophrenia than when it is heart disease or cancer.”