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Primarily organized to respond to the short-term disability income responsibilities under New Jersey statutes, the Group Insurance Trust has expanded its variety of coverages to include group term life, accidental death and dismemberment, weekly disability income, long-term disability income, six medical plans and a dental plan.

The major objectives of the Group Insurance Trust have been to use plan designs that are easily understood by participating employees and to provide as much stability in funding as can be obtained in a rapidly inflating market place of medical care. The program is run as an "experience rated contract" with State Mutual, with surplus funding available for reallocation to reduce future premiums paid by employers and employees.

Directed by a seven-member Board of Trustees, elected by plan participants pursuant to the requirements of Section 501(c)(9) of the Internal Revenue Code, the Group Insurance Trust is managed by staff employees. This staff is responsible for sales, installation, certificate and identification card issuance, billing and collection of premiums, payment of claims and providing Trustee and insurance carrier reports.

Approximately 230 employers participate in providing innovative plans which provide $11 million per year in benefits to the industry's employees.

D. Western Agriculture

Agriculture in the Western U.S., particularly California and Arizona, is highly seasonal, with fruit, grape and vegetable production supplying over half of the entire U.S. consumers' needs, as well as providing major exports which assist the nation's international balance of trade.

Traditional insurance carriers, and all current HMO organizations, declined in the past to provide medical coverage for the 350,000 employees of this vital industry, due to their seasonal employment, wage levels, and predominantly Spanishspeaking language needs.

Four major farm organizations provide virtually all of the health benefits for these seasonal employees, using association designed and operated programs. Self funding is a critical component of these benefit plans, due to the reluctance of the usual insurance market to offer coverages.

The largest of these programs, Western Growers Association, provides benefits to 18,000 employees, offering free choice of medical provider as well as managed care plans.

Grouping the buying power of its 2,000 participating members, Western Growers has been able to negotiate discounts from hospitals which saved 46% on billed charges on 1992, and saving over $4 million dollars for farm employers and their employees. The association's plans average 20% discounts in contracting doctor's fees and elimination of "usual and customary" problems for patients using contracting physicians. WGA has contracted for 9% below-wholesale drug costs for its medical plans.

The association also operates a licensed and admitted workers' compensation company in Arizona and California, and has integrated on-the-job and off-the-job medical benefits for over 10 years, preventing "double-dipping" and making the coordination of benefits easy.

The association offers flexible benefit plans, which have been very well received by seasonal farm workers. It also offers services by medical providers in Mexico for those workers near the U.S. border, and for those workers with families in Mexico.

These are but a few examples of the thousands of association-sponsored medical plans offered by nonprofit member associations of ASAE.

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VII. ASAE POSITION

President Clinton has recognized the need for employers and individuals to join together in pooling their buying power. Association plans have been doing just that for over 55 years, and can provide a major service to our nation by being allowed to continue.

ASAE supports the basic goals of health care reform, which would provide quality, affordable, accessible health care for all Americans. ASAE further believes that association health care plans possess many years of proven experience in the delivery of benefits through purchasing coalitions. As such, association health care plans can lead the way to the reform goals of providing the efficient delivery of quality health care to more citizens.

Chairman STARK. Let me see, Mr. Kreidler, if we can deal with your problem here, which is somewhat different from other members of the panel, and see if I perhaps don't have this-if in fact Dr. McDermott were successful and there were a single-payer system in the country, you, the association's role in this would be gone, as would everybody else's.

If, in fact, there is a guaranteed open enrollment in every insurance plan and if, as the President suggests, there were premium controls, so you really couldn't offer anything to your members that they couldn't just walk to the corner alliance and buy, you also would be out of business.

Now, from the standpoint of the various associations, that is troublesome on several counts. One, many associations use it, and properly so as a recruiting to get people to join up.

My daughter runs a social worker's operation out in the West and one of the things they offer their members is health insurance. It is an incentive to join, fair game. The AARP makes money on it. I have no quarrel with that. They split the take with Prudential, a big plan.

You have somewhat the same worries that the insurance agents have, that suddenly if there is this monolithic Federal plan, you all won't have anything to do with it. I guess all I can say to you is, I don't think that is very likely very quickly. Maybe over a period of years. But I rather suspect that if nothing else, while I happen to support Dr. McDermott's single-payer plan, we are a couple of votes shy right now of overriding-well, we are working on it.

But if in fact we must provide a somewhat less generous guaranteed plan, there will basically be a role for supplemental as there is now for Medicare, is my prediction, and that will be a perfectly and logically useful place for the associations to in fact provide a service to their members, because we probably will not be able to raise the money, is my guess, to provide as generous coverage as many of your members have and want.

And so all I can say to you is that while it would be my dream to put you out of the insurance business, and you probably would share that as a social goal to say, Look, we have all got the ultimate insurance and we don't need to go to the Federal Government in my case or the materials dealers have to go to their associations in their case, but don't count on it.

So all I am going to suggest to you is I suspect there will be some role still where the associations will be able to provide a useful service to their members although it may not be as extensive as it is now.

Having said that, until we know the details of the plan it will be hard. But your interests are also supported by the insurance agents who, in a sense, want to participate and they feel, perhaps in many cases rightly so, that they provide a service. They don't want to see themselves knocked out of the ball game, and they in many States are a very potent political force and probably won't be. I guess I can say to you, you are on the sunny side of better than 50-50 of staying very much involved, although there will be a change. If I could tell you what I thought the change was, I would. Unless Mr. McDermott and I get four votes this afternoon, then

you are all out of business. Then we really will have done the right thing.

I hope that makes your trip here worthwhile, a little bit of assur

ance.

Dr. McDermott.

Mr. MCDERMOTT. Thank you, Mr. Chairman.

It has always been a puzzle to me as a practicing physician, but also from a broader public policy perspective, what have been the impediments to the private sector? We hear the private sector is going to fix everything in the President's plan. What have been the impediments to the private sector coming up with a database and standard forms and all the things that people use to argue that we don't want a government plan, we don't want the government intervening. The private sector for 45 years have been out there flopping around.

I practiced medicine in a small psychiatric office where we had to deal with 14 different insurance companies in Seattle. Every form was different.

You are data experts. Why hasn't it happened before they saw the club coming from us?

Mr. HOUTZ. I think in certain sectors it has been happening. There are several companies out there that for several years have been sending electronic claims, electronic encounters, doing some work on eligibility to various insurance companies.

The insurance companies for many years have been a bottleneck to being able to transmit electronic data back and forth to them. In today's environment there are probably less than 25 insurance companies in the United States that have the capability to provide open enrollment systems so a provider's office can call in and find out in an electronic mode which patients are eligible. That part of the industry is also starting to take off, and it will take 4 or 5 years.

Mr. MCDERMOTT. You are saying out of 1,500 insurance companies in this country, only 25 are capable of doing that?

Mr. HOUTZ. Twenty-five or thirty today. There is a push to begin to provide eligibility services for physicians. Although we have had a standard form for physician claims, each insurance company had different requirements of how they wanted to print data on that format; and until just recently, each insurance company had a different electronic format an electronic claim form, procedure code and a diagnosis code, in addition to those two data elements that are 200 to 300 data elements that can go into an electronic claim, and each insurance company had different requirements.

Our company today prepares over 400 electronic formats. It has been made much easier by the national standard format because there is some consistency of information, and the rapidity with which you can bring up insurance companies has vastly improved. When you say to the private sector, why haven't you done this, I am in the private sector and we have been trying as hard as we can. We work today with every insurance company that will accept a national standard format. We do it for them without charge.

I think insurance companies have been a tremendous bottleneck until recently.

Mr. MCDERMOTT. What was the professional reason for them maintaining themselves as a bottleneck? It must have been to their advantage.

Ms. HERR. Part of the reason has been that a lot of the systems early on became homegrown systems. A lot of hospitals put together their own electronic format so they could do things through electronic transmissions. As they started investing a lot of money in these systems, it became very difficult to find money to change to another type.

Another problem, I still walk into hospitals in this country that don't have a PC to do payroll. The technology is not consistent. When you start looking at the high end of what is achievable you forget there are a lot of low-end folks who will at least need the investment funds for the hardware capability, much less the software needs. That is one of the reasons we have said the voluntary way of doing this will not work.

We support mandated standards for all of this stuff. It will not go forward without mandated standards.

Mr. HOUTZ. Our association is committed and the reason the Association was formed was a commitment to EDI and electronic data interchange. I feel that our association and others we work with, with or without government mandates, I think, will provide the leadership. And we are taking actions to make people adhere and be consistent with the formats, but it is going to take us 6 to 8 years to do that with government help. I don't know if you can get the thing passed within that time.

If you could help us with the mandates of standards, we could cut that time in half.

Mr. PETERSON. Without taking any kind of policy position, because I am a technical person, not a politician here, but I wanted to explain that with the technology that is available to us, if the impediment is one of 400 different forms or something, this is something that we have dealt with-again, with the school district administration that we have had to do. Every one of these optical memory cards could literally carry its own format, whether the filing-claim filing is to be done electronically, whether it is to be printed on a paper form, whatever, because essentially you_are dealing with the same data elements. You are only talking about where you are placing them on a format.

This is almost-it takes time, but for technology purposes it is a no-brainer.

Mr. MCDERMOTT. Do you accept the time line Mr. Houtz has suggested of 4 to 8 years to get the system up and running nationally? Is that too long? Could it be done before that?

Mr. PETERSON. Absolutely. From my standpoint, it is one of how quickly can the technology be moved into place, because setting up to be able to run this technology is not that long a period of time. Mr. MCDERMOTT. These are the ones that are puzzling to me because the more we try to get data, the more difficulties we face. Trying to get it manipulated in the Congressional Budget Office and in Joint Tax was absolutely the biggest bottleneck for us. The reason we haven't had figures out is because we had to wait 6 or 7 months while the CBO tried to drag together from all over the place all the bits and pieces.

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