By David Hendricks
San Antonio Express-News
June 19, 2002

Stopping the rise in employer health insurance costs is the No. 1 priority for Texas businesses for the 2003 session of the Legislature.

So declares the Austin-based Texas Association of Business, which represents 140,000 employers and 200 chambers of commerce.

Amid other pressing issues ranging from business taxation to transportation and education, TAB has selected health insurance for its biggest push for the next legislative session, said TAB President Bill Hammond.

The association has produced lots of data, but one finding stands out: 75 percent of the 4.5 million uninsured Texans have full-time jobs. When children of those workers are counted, 80 percent of uninsured Texans are in working families.

Obviously, not enough employers are offering health insurance to workers. The matter is getting worse. Eighteen percent of Texas firms dropped health insurance between 1996 and 2001, Hammond said.

Texas businesses that do offer health care benefits spent $39 billion in 2000 and are facing a 25 percent increase this year, compared to 15 percent nationally.

Meanwhile, this has been no picnic for insurance companies, which have lost $1.5 billion in Texas during the last five years. Some have left Texas altogether.

Hammond describes the mess as "a hostile situation in Texas" and proposes solutions for two underlying causes: malpractice insurance premiums and mandates for coverage.

Malpractice insurance is too costly, Hammond said, with some specialty doctors paying $250,000 a year in premiums. That won't get better because a dwindling number of insurers offer malpractice insurance in the state.

One step Texas should take is to cap lawsuit awards for pain and suffering. "About $250,000 is reasonable," Hammond said. Texas also should set up special courts, like grand juries, with three-doctor panels to review malpractice lawsuits before they enter the costly discovery phases.

Eighty-five percent of malpractice lawsuits never go to trial but still cost insurers large sums of money for discovery before the cases are thrown out, Hammond said. Special courts and awards caps have lowered malpractice premiums in Louisiana, Indiana and California, he added.

As for mandates, small businesses must meet 67 of them in basic health care coverage. Companies large enough to self-insure employees don't have to meet those mandates.

The list of mandates should be flexible, Hammond said. Companies ought to have the option of not covering treatment for chemical dependencies, for example.

A basic policy for doctor visits and hospitalization ought to be available so that more Texans can get essential services. Mandate flexibility also would help workers who find themselves paying more for their share of health insurance in the forms of higher co-payments and larger deductibles.

A study released Tuesday by UCLA Andersen Forecast said 50 percent of 460 surveyed companies changed insurance plans last year so employees would pay higher shares of the cost. Eighty percent of companies expect double-digit increases next year.

At some companies, the employee share of health care insurance remains the same, but pay raises are smaller. It's one or the other.

"Businesses need to tell the Texas Legislature three things," Hammond said. "One, this is a priority for the next session. Second, businesses should be at the table when this is discussed because businesses are the consumers. Third, don't pass any legislation that drives up the cost by a dime."

dhendricks@express-news.net