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 /NOTE TO EDITORS: For a copy of Milliman & Robertson's "Overview of Managed Competition," contact Martha Kern, Donley Communications, 445 Park Ave., New York, NY 10022; 212-751-6126/
 MILWAUKEE, March 4 /PRNewswire/ -- The enactment of a managed competition model for healthcare reform would result in a significant upheaval in the health insurance industry.
 If many of the concepts of managed competition currently under consideration by the Clinton Administration are adopted, insurers selling traditional health insurance will have to embrace the principles of managed care or risk losing considerable business. These conclusions are part of a report on managed competition issued today by Milliman & Robertson, a national actuarial and management consulting firm.
 Likely winners under the new healthcare system would be managed care companies such as health maintenance organizations that actively coordinate the appropriate use of healthcare resources. Hospitals and physicians who can document quality healthcare and cost efficiency will also be successful.
 The report, written by M&R principal Greg Herrle, identifies the likely winners and losers under a system of managed competition and critically reviews the potential for universal coverage and cost control.
 Specifically, the report questions:
 -- whether universal health insurance coverage can be achieved without significant premium and tax subsidies to low income and even moderate income individuals,
 -- whether it is reasonable to expect individuals and small businesses to contribute a significant portion of their income toward health insurance,
 -- whether any tax law changes associated with managed competition would raise enough revenue to fund the subsidies needed to provide insurance coverage to low income individuals, especially if mandated uniform benefits are too comprehensive,
 -- whether a comprehensive uniform benefit plan will provide consumers enough incentive to judiciously use healthcare services, and
 -- whether government regulations may become too onerous?
 The Elimination of Traditional Fee-for-Service Insurance
 Traditional fee-for-service health insurance programs, in which individuals have unlimited access to physicians and medical treatment, may not be able to compete under a system of intense price competition structured to reward quality and cost efficient providers, according to the report.
 "Insurance companies that are not yet in managed care and that focus on the small group and individual markets, where risk selection and strong broker networks are key ingredients to their success, may find it very difficult to compete under managed competition." Conversely, "the market share for managed care organizations could increase dramatically over the next several years," the report suggests.
 Consolidation of Healthcare Industry
 The report states that "managed competition will also accelerate the consolidation of the healthcare industry as hospitals and medical groups merge and develop strategic alliances. The need for efficiency may reduce demand for specialists and result in a reduction in specialist income over time." Hospitals and physicians will find themselves negotiating with larger managed care organizations and assuming more financial risk.
 Employer Impact Will Vary
 Tax code changes would limit the deductibility of employer contributions toward healthcare to the lowest price health plan in the employer's geographical area and employer contributions would only be deductible if health insurance is purchased from a federally qualified health plan.
 Small employers and individuals would purchase insurance directly from large purchasing coalitions. Employers and individuals who in the past could not qualify for insurance coverage due to preexisting medical conditions could no longer be denied coverage due to their health status. However, many small employers who benefit from traditional insurance rating practices may find their insurance premiums increased dramatically under a community rating structure.
 Milliman & Robertson, Inc., is a national firm of actuaries and management consultants serving the full range of business, healthcare, financial and government organizations. Founded in 1947, Milliman & Robertson has 25 offices in the United States and is the U.S. member of Woodrow Milliman, an international affiliation of actuarial firms.
 -0- 3/4/93
 /CONTACT: Gregory Herrle of Milliman & Robertson, 414-784-2250; or Peter Cullum of Donley Communications, in New York, 212-751-6126, for Milliman & Robertson/

CO: Milliman & Robertson ST: Wisconsin IN: INS SU: ECO

GK -- NY030 -- 2873 03/04/93 10:06 EST
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Date:Mar 4, 1993

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