August 17, 2007 / 1:29 PM / 11 years ago

Kaiser HMO CEO backs Schwarzenegger's health reform

CHICAGO (Reuters) - The chief executive of the biggest health maintenance organization in the United States said on Thursday he backs key elements of California Gov. Arnold Schwarzenegger’s proposal to extend health-care coverage to millions of uninsured individuals.

Schwarzenegger’s $12 billion pitch to provide health insurance in the estimated 6.5 million without insurance in the most populous U.S. state would seek higher taxes from doctors and hospitals and asks health plans to limit profits.

The Republican governor’s plan is not seen passing this year because of a limited time schedule will make it difficult to pass a budget as well as resistance from state lawmakers, but it has a chance of re-emerging when the Legislature returns in January.

“I think it’s attainable and achievable,” George Halvorson, the CEO of Kaiser Permanente, the biggest HMO in the U.S., with more than 8 million customers, said in an interview. “I’d like to see universal coverage passed in California, and I’d like to see it be a model (for national reform).”

The California plan follows a spate of efforts by states, most notably in Massachusetts, to cover the rising numbers of individuals in the U.S. lacking health insurance, now estimated at 45 million people, or 15 percent of the population.

Halvorson said he backs Schwarzenegger’s proposal to require that individuals have insurance, and to mandate that employers offer it, or pay into a fund. He also said he supports a requirement that health plans not reject coverage based on preexisting medical conditions.

For health plans, a controversial element of Schwarzenegger’s plan is a proposal that would require health plans to spend at least 85 cents of every dollars in premiums on medical care, according to Wall Street analysts.

WellPoint Inc., the biggest health plan by membership and a major player in the California health insurance sector, is seen as being the biggest at risk because historically it has spent the least on medical care out of premium dollars in the state.

Indianapolis-based WellPoint has also sponsored ads in the state warning about the dangers of the Schwarzenegger plan.

Oakland, California-based Kaiser is the biggest health maintenance organization in the U.S.

HMOs tend to adhere to stricter limits on patient access to doctors and hospitals than more flexible plans. As a result, they are better at keeping costs down.

Bigger health plans, such as WellPoint, and UnitedHealth Group Inc., have moved to preferred provider organization models (PPOS), which offer more flexibility in moving in and out of doctor networks, but costs individuals more money.

Kaiser is part of a coalition of health plans in California backing universal coverage, including Blue Shield of California, and Health Net Inc.

Halvorson is promoting a new book, “Health Care Reform Now!: A Prescription for Change,” in which he laments the dearth of health-care data, weak incentives for quality care and the slow pace of computerization of medical records.

He advocates adopting features from European models of health care, for example in Switzerland and the Netherlands, where insurance is mandated, but where private plans still remain an option.

“Instead of just ignoring the Europeans, we should learn from Europe,” he said.

Reporting by Kim Dixon, editing by Jeffrey Benkoe

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