A government association: vigorous competition.

• Author: Tromans, Fred

Health-Care Cost Per Employee: $3,853

Health-care reform? It's happening now -- but through the marketplace, not an act of Congress. Payors are rapidly adopting managed-care techniques, and hospitals and physicians are coming together to form health-care networks that can compete on both price and quality. And consumers, payors, providers and employers increasingly have more information with which to make educated choices.

Despite these dramatic private-sector reforms, the media has focused almost exclusively on health-care reform efforts in Congress. At the Government Employees Hospital Association, we believe Congress will pass a health-care reform bill this year. At the very least, we think it will address insurance reform by eliminating health-underwriting and risk-selection mechanisms and by mandating some form of community rating. An employer mandate isn't out of the picture, either.

Tort reform is another issue on the congressional plate. As part of health-care reform, Congress may decide to cap damage awards in medical malpractice suits. Currently, about 75 percent of the medical malpractice suits that are filed don't result in any compensation to the plaintiff, but the large potential motivates people to file actions anyway. These legal costs and the defensive medicine practices they induce greatly inflate the cost of health care. Both health-care and tort reforms are needed and will go a long way toward reducing the population of uninsured and addressing the cost of health care in our society.

One troubling aspect of the Clinton health-care reform proposal is the degree of regulation to be left to the states. Many states are passing "any willing provider" laws, which require preferred-provider networks to accept any care provider who's willing to abide by their pricing constraints. These laws, along with mandated-benefits legislation, reduce the effectiveness of managed care by limiting the plan's ability to control quality, cost and utilization. If states continue to pass such legislation, which seems likely, they'll subvert private-sector efforts to reform the health-care system, just as these efforts are beginning to bear fruit.

GEHA is vitally interested in health-care reform, both on the legislative and private-sector levels. We're an association that provides health insurance benefits to federal civilian workers, and we compete with about 350 other organizations to provide these services. In 1993 we covered about 680,000...