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Health execs mull reform
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March 11, 1998: 4:01 p.m. ET
Merck, Humana leaders say privatization would increase quality, control costs
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NEW YORK (CNNfn) - Two of the health-care industry's top executives Tuesday called for further privatization in the sector.
David Jones, chairman of Humana Inc., and Raymond Gilmartin, president and CEO of Merck & Co. Inc., are part of an effort called The Healthcare Leadership Council, which lobbies for reform in the health-care industry.
The two appeared on CNNfn's "In the Game" to discuss their proposals for change, emphasizing less government involvement in health care.
Here are excerpts from that interview:
STUART VARNEY, CNNfn ANCHOR: You formed an organization ten years ago to lobby for change and reform of the health care system. Mr. Jones, first of all, what are you really looking for here? What major reform do you want?
DAVID JONES, CHAIRMAN, HUMANA: We want to give the market an opportunity to work for consumers in health care. Much of health care 10 years ago was controlled by the government. Medicare was an old program that was sort of fixed in time; even today it doesn't include prescriptions, dental care, eye care, lots of things that you and I would find in our health-care plan. So we're trying to make sure that market-based reform comes to health care.
VARNEY: In a nutshell, gentlemen, are you trying to keep the government out and put private enterprise in?
RAYMOND GILMARTIN, CEO, MERCK: Well, the private enterprise system has been quite successful over the last couple of years in bringing costs under control and, at the same time, raising the quality in amount of choice available to people within their health plans. So we think that the private sector has demonstrated that through competition and choice that you can increase quality, control costs and increase access.
VARNEY: So the principal area of reform that you are looking at is Medicare/Medicaid that is where the government involvement is greatest presumably. That is where you want greatest reform?
JONES: It is, although the government involvement often is pervasive. It has been pointed out the Internal Revenue Service regulations are 12,000 pages long, and that has happened over 80, 90 years. Medicare regulations, for example, are 45,000 pages long. They are confusing and doctors and nurses have to interpret them. So Medicare, Medicaid, Veterans Administration, public health, Indian health -- the government is in many, many aspects of health care. They tend to freeze things in time, perhaps they captured the best practices at a moment, as they did with Medicare 30-some years ago. But, when 30 years go by, they become obsolete in a hurry. So we think that if consumers have enough choice, they will insist on value, which includes quality as well as price.
VARNEY: I put it to you, though, that given the political climate in America today, the government is seen as the guardian of health services for the little guy. Not the private enterprise system, but the government is seen as the guardian. It would be almost impossible to get the government out in today's political climate, wouldn't it?
GILMARTIN: Well, I think that if you look at the private sector where the government has not had as much influence, that by employers demanding value on behalf of their employees when purchasing health care, is why we have seen the kind of advances over last couple years in control of costs. Clearly, government is a factor, and at this point I think that we should be concerned whether or not government will reenter the private sector. In the attempt to improve quality, or have the appearance of improving quality, actually have the opposite of intended effect by putting in more mandates.
VARNEY: That does appear to be a move to rein in the managed-care business of the day. And government really wants its hands on this, doesn't it?
JONES: It is an easy vote to say we are doing something great for consumers, that we are going create another mandate. But, in fact, prices [in private health care have] been dramatically controlled over the last four or five years. In 1996, Medicare costs went up 8.1 percent while private sector costs only went up 3.5 percent and Medicare doesn't have prescriptions, it doesn't have dental, doesn't have all the other things.
In addition to controlling costs, we now have things called disease management so that if we find someone who signs up for a health plan who has diabetes, asthma, hypertension, congestive heart failure, those patients, or those customers are immediately put into programs which enable them to improve their health. A nurse calls every week to see how you are doing, have you gained any weight, what are you eating, how can we cause you to be a healthier person. If you do, you're happy as a consumer and we are happy because the premium is paid for a longer time and the costs are lower.
VARNEY: Fair enough. Ray Gilmartin, when you're lobbying for this in Washington, when you're looking for more private enterprise in the health-care system in Washington, do you get a healthy response, a positive response from Clinton Administration?
GILMARTIN: Well, I think, that based on the record over the last couple years, in the private sector, there is much more of a healthy response than there had been a few years ago. But I think we have to continue emphasizing the role of quality.
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