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A.M. BEST PROBES SPIRALING HEALTH CARE COSTS

 OLDWICK, N.J., April 13 /PRNewswire/ -- While the storyline has yet to be finalized, there is little doubt that a significant revamping of the nation's health care system is warranted, according to a report released by the A.M. Best Company.
 "Health Care Reform: Will Insurers Be Treatable?" investigates a number of primary factors that have caused skyrocketing health care costs over the past several years, including: cost shifting; overtreatment; unnecessary treatment; technology; increasing drug costs; a shortage of primary-care providers; malpractice; fraud; and administrative inefficiencies. In addition, it reviews President Clinton's health plan, which to date still is surrounded by secrecy and uncertainty regarding specific details, but generally aims to curtail costs through managed care, as well as provide universal coverage to the uninsured and those with preexisting conditions.
 The United States spent nearly 14 percent of its gross domestic product last year on health care costs -- more than any other developed country. In the past decade, annual health care costs have exploded from more than $300 billion to $840 million, significantly outpacing the rate of inflation.
 For the health insurance industry, on the other hand, "the immediate outlook is one of continued volatility, uncertainty and opportunity," according to Larry G. Mayewski, senior vice president of Best's life/health division and an author of the report. The industry in the past several years has faced significant volatility in the form of consolidation due to competitive pressure and overcapacity, he said. "Insurers that lacked competitive advantages in underwriting, claims management, cost structure, capital strength and/or service have been forced to leave the business as the cost of medical care has spiraled.
 "But those with exceptional underwriting skills, product design expertise, strong administrative capabilities and extremely efficient operations should continue to maintain a competitive foothold in a shrinking marketplace," Mr. Mayewski added.
 Copies of the report may be obtained by calling 908-439-2200, ext. 5684.
 -0- 4/13/93
 /CONTACT: Larry G. Mayewski of A.M. Best Company, 908-439-2200, ext. 5684/


CO: A.M. Best Company ST: New Jersey IN: INS HEA SU: ECO

GK -- NY034 -- 5140 04/13/93 10:29 EDT
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Date:Apr 13, 1993
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