HEALTH COSTS: BLUE CROSS OFFICIAL PROMOTES `RESPONSIBLE MARKET BEHAVIOR'

Americans spend $23,000 a second on health care. That's a staggering $2 billion a day or $733 billion a year.

It's a major cost to both employers and employees. Across the nation, the battle cry has been sounded for health care reform.

Proponents of a government-run system argue that it would provide expanded access to health care, but their real concern is the financial bottom line, according to officials of Blue Cross and Blue Shield of Missouri, the largest health insurer in the state.

Blue Cross officials are touting a different approach.

The proposal by the Blue Cross and Blue Shield Association representing the nation's Blue Cross companies calls for making health care benefits universal and affordable.

Government, working with the private sector, would be called on to establish new guidelines requiring "responsible market behavior" from all health insurers, said Roy Heimburger, president and CEO of Blue Cross and Blue Shield of Missouri, based in St. Louis.

The plan calls for:

Guaranteed access to benefits at equitable rates for every group or individual, regardless of health conditions.

Portable benefits, ensuring that no one who loses or changes jobs would be denied coverage.

No exclusions for pre-existing conditions.

Under the plan, health care insurers who meet those guidelines would be licensed by their states as "Accountable Health Plans."

"Today, because of competition, we are in the business of selecting risk," said Heimburger.

Insurers essentially want to insure only those individuals who are relatively healthy. But under the Blue Cross plan, insurers by law would provide coverage regardless of a person's health risk.

"It's real easy to be a selector of risk. It's more difficult to be a manager of risk," said Heimburger, who advocates "managed competition."

He said the plan envisions there would be fewer health insurers, with each insurer covering more people, thus spreading the financial risk among a larger base of customers.

In a recent Blue Cross publication, Heimburger said the plan involves reforming the health insurance industry.

"With our own house in order, we would turn to controlling costs through strong cost-management incentives that would change the way medicine is practiced," he said.

"We want a system in which all Americans under age 65, not covered under Medicaid or Medicare, would be guaranteed private health insurance with, at least, a basic benefits package. All working Americans would be covered under private insurance through their employer, regardless of company size," he said.

"We want a system in which government and the private sector cooperate," he explained, "and those not covered by the private sector be included in an expanded Medicaid program."

Nationwide, 85 percent of Americans are covered by private or government health plans. Blue Cross companies nationwide insure about a third of the U.S. population, Heimburger said.

But some 34 million Americans currently don't have health insurance. Heimburger said everyone should be provided access to affordable, quality health insurance.

He predicted some type of health reform plan will be adopted during the next four years under President Clinton's administration.

He said it's likely some federal legislation will be passed in 1994 and implemented over a five- to seven-year period.

The profits of insurers such as Blue Cross and Blue Shield of Missouri often come in for criticism. But Heimburger said Blue Cross "must be financially viable."

"In 1987 and 1988, Blue Cross and Blue Shield lost a lot of money," he said. Last year, the company's total profit from insurance alone was $18 million, or about 2 percent of its total premiums.

"Taken in context, $18 million is not a whole lot," he said. The company's insurance-premium revenue totaled more than $800 million last year.

The company has a $175 million reserve, which equates to about a 2-month reserve. State law requires a two-month reserve, he said.

Heimburger said improved medical technology is a major factor in increased health care costs.

In 1936, health care benefits cost 75 cents a month. But such care was primitive by today's standards. There was no penicillin, polio vaccine, open-heart surgery or heart or kidney transplant.

"If you were born premature (in the 1950s), your parents or parents' insurance company would have spent a couple hundred dollars," said Heimburger.

Today, Blue Cross would spend $500,000 on such a child within the first five months of life, he said. The child, however, would survive. Forty years ago, such a child would have died.

"That is a significant increase in cost, the price of one miracle," said Heimburger.

"There's a lot of procedures that we are doing today that are good, that help people with a better life, but they cost money," he said.

"Fifty years ago, not many people lived past 70," he noted. "Today, the greater part of the population does."

That's another factor that drives up health care spending, Blue Cross officials say. Today, the 11 percent of the nation's population over age 65 accounts for 35 percent of health care spending. By 2040, the elderly are expected to account for 20 percent of the nation's population and an even greater share of health care spending.

Physicians fear malpractice lawsuits, which often lead to extra medical procedures being performed, Blue Cross officials say. This defensive medicine adds as much as $21 billion to the nation's health care expenses, according to the American Medical Association.

There's also the issue of paperwork. There are currently more than 1,500 health insurance companies, each with its own forms and procedures.

It's estimated health care providers spend as much as $90 billion annually on record-keeping.