The Threats To True Health Care Reform

In its search for a compromise on health-care reform, Congress seems ready to accept what it calls "triggers." The idea is to avoid unpalatable medicine, such as mandates for employers to buy workers' insurance or price controls, in favor of letting health-care markets work. If competition doesn't produce universal coverage and rein in costs, triggers would kick in, extending government's heavy hand.

This is a political dodge, of course, but a dodge that makes sense. Triggers would give a reformed health-care market breathing space to build on employers' recent progress in limiting medical inflation. But advocates of market-based reform shouldn't celebrate yet. Indeed, Corporate America should watch out for three disturbing possibilities:

-- Cost-shifting. By not covering its own employees, small business in effect shifts much of its health bill to big companies. Doctors and hospitals charge the insured more. Lawmakers eager to court small business may lock in that cost- shifting by requiring Big Business to buy insurance while exempting or heavily subsidizing small companies.

-- Mangling managed care. In the name of "patient protection," physicians are fighting innovations that curb costs. The goal: protect incomes by preventing HMOs and insurers from dealing with the most efficient doctors and hospitals.

-- Patchwork benefits. Governors are trying to regulate, ration, and tax the health benefits offered by multistate employers. State-by-state control would rob Big Business of the flexibility and clout it needs to rein in costs.

The struggles over mandates, price controls, and taxes occupy center stage in Washington. But Corporate America must be alert to what's going on in the wings. Breaks for small business, limits on managed care, and state control of health care could create a system that's actually worse than today's morass.

    Before it's here, it's on the Bloomberg Terminal.