Electronic billing's savings to come from job cuts; labor costs to be reduced by electronic transmission.

Simplifying billing procedures -- as outlined in President Clinton's health care reform plan -- will reduce costs for the public by cutting jobs at hospitals and insurance companies, according to local health care experts.

Although Clinton has talked publicly about having "a single form" for health care claims, the plan envisions a national standard for electronic transmission of claims and billing information.

"The primary savings will be in labor costs ... which will be jobs lost," said Craig McKnight, partner in charge of health care for California in the L.A. office of accounting firm Coopers & Lybrand.

Currently, many hospitals have clerical people creating paperwork in the form of computerized billing statements that they then mail to insurance companies, McKnight said. Insurance company staffers enter this information into computers via scanners or key punching or typing.

Electronic transmission would eliminate all that work at the insurers and reduce it at the hospitals, McKnight said. It is something that health care providers and payers have been working towards for several years, he added.

"The process that Clinton has (outlined) is already under way," McKnight said. "Many hospitals have electronic billing. They use a micro (computer) or a mainframe. The people who don't have it are the doctors and the clinics."

But even these smaller health care providers would plug in under the Clinton plan, McKnight said. A computer setup for electronic transmissions "is not particularly expensive," running about $3,000 for a system that would enable a doctor to send bills through a desktop computer with a modem that ties into a phone line, McKnight said.

Insurance companies, too, are working towards electronic transmission of information, said Kathleen Fyffe, director of payment systems for the Health Insurance Association of America. Some major health care players around the country are already using a prototype electronic transmission program developed by the American National Standards Institute, she said.

Tom Allen, director of group claims for the Western U.S. for Des Moines, Iowa-based Principal Mutual Life Insurance Co., the second largest group health insurance provider in the U.S., said the company has cut some clerical staff.

About 30 percent of the company's health care payments in California these days are electronically transmitted, which has resulted in a 40 percent increase in productivity as well as staff reductions, Allen said.

Currently, 410 people process the same volume of claims that it took 730 people to handle a few years ago in the company's data processing units in San Diego, Thousand Oaks and Petaluma, he said.

"The effort to reduce the administrative burden for claims submission is moving down a relatively fast track and has been for some time," Allen said.

William Gurtner, senior vice president of health care industry services at Woodland Hills-based Blue Cross of California, said about 30 percent of its claims are processed electronically and the company's goal is to be "close to 100 percent" in the next year.

He declined to estimate how electronic processing would affect the 3,000-employee work force at Woodland Hills. But he acknowledged the company may have less need for employees to process paperwork. Gurtner added, however, that employees may be given other jobs rather than laid off.

Blue Cross officials are wary that savings from electronic transmission of claims information may be "eaten up" by other requirements of Clinton's health care reform.

Specifically, "the reform is proposing that the public have access to a significant amount of information which allows them to be more selective" in choosing a health insurance plan and/or health care provider, Gurtner said.

Gathering that information and distributing it to the public will mean new labor costs. Data processing employees may be redeployed to distributing that information, he said.