Appetite control: new HIAA chairman says Americans need to be weaned from their love of cheap health care. (Life/Health: Health-Care Costs).

Among the more difficult challenges facing the new chairman of the Health Insurance Association of America is finding a way to wean U.S. citizens off their appetites for health care--as part of an overall effort to stem rising healthcare costs.

The health-care sector has a "perverse" economy in that the consumer isn't the one paying, said Ben Cutler, chairman of Fortis Health in Milwaukee and executive vice president of Fortis Inc. in New York. "As long as the consumer doesn't have any skin in the game for the economic consequences of their decisions, you won't have a moderating effect on utilization," Cutler said.

In the 1960s, about 55% of spending on health care was borne by the consumer. Now it's around 15% because over the years, employers have enriched benefit packages and insulated consumers from the economics of health care, he said.

Cutler was to be elected chairman of HIAA's board during the organization's annual meeting in New Orleans Oct. 2-4, but the schedule was reduced to one day as the city and region evacuated in anticipation of what had been Hurricane Lull.

The official naming of Cutler will be forthcoming, but HIAA members attending the annual meeting did get to hear guest speaker James Carville, co-host of television's "Crossfire," speak about the impending "force five storm brewing called health-care costs and affordability," Cutler said.

Carville couldn't pinpoint when that storm would hit, but with medical inflation running 12% to 15% a year, coupled with current economic conditions, a huge political storm could hit in the next couple of years. "Count on it," Cutler said. "I believe he's right?'

Solving the problem is going to require the insurance industry, health-care providers and employers working together, because it's going to take much more than a single idea or event, Cutler said.

For a time, health maintenance organizations and the promise of managed care looked like the answer--many even breathed a sigh of relief. But it's only in recent years that people have come to realize "it was overpromised and underdelivered," he said.

In fairness, a lot of the HMO bashing is blown out of proportion, Cutler said. Managed care did arrest healthcare costs for a number of years, but that alone isn't enough, he said.

Wisconsin Gov. Scott McCallum held a series of sessions around the state this summer to get input on the cost crisis in Wisconsin. During one of them, the chief executive of a Milwaukee hospital said Americans have an "insatiable appetite" for health care, Cutler said.

Someone in the audience responded that Americans would have insatiable appetites for Mercedes Benzes if it was just a matter of a $10 co-pay, he said.

"As long as people see it only as a $10 co-pay, why wouldn't they want a CAT scan?," Cutler said. "There is a view that health care should be provided to everyone regardless of their ability to afford it, but where does that notion exist in other parts of the economy?

Changing this way of thinking wont't be easy and could take years of educating the American public, he said. "Moving to a more consumer-centered, choice-based system will entail a huge selling job, to be honest," Cutler said. "Clearly many will view this consumer-centered notion as a way to cost-shift to employees rather than a necessary revolution to the whole health-care financing model."

Refundable tax credits and federal funding assistance for high-risk pools are proposals made by President Bush, which Cutler sees as essential help for solving the health-care cost problem, and he wants HIAA to take a leadership position in finding a solution.

Cutler spends a lot of time in Washington, D.C., lobbying on health-care issues, and he expects to spend more time in that role as HTAA chairman. He is also a board member of the Washington Business Group on Health.

Debate over an optional federal charter and the effort by state insurance commissioners to create an interstate compact are but two issues the HIAA has to weigh in on, he said. "Genetic testing, Medicare, prescription drugs--these are not going away and will require HIAA staff to work member-driven committees to come up with position papers on these issues," Cutler said.

RELATED ARTICLE: Ben Cutler

HIAA Chairman

* Chairman of Fortis Health and executive vice president of Fortis Inc., responsible for mergers and acquisitions, in August 2002.

* Previously president and chief executive officer of Fortis Health since 1996.

* More than 30 years in the insurance industry includes serving as president of Fortis Sales and Fortis Life. Before joining Fortis in 1985, Cutler held various positions at Sun Life Group of America and USLIFE Corp.