Furious, Leland used .a personal privilege speech to retaliate: “Why then did the Texas Medical Association . . . fight with so much vigor against this legislation? … The answer is a simple one. The lobby has demonstrated time and again in this Legislature and in past Legislatures . . . that they want to control what we, as a parliamentary body, create. Because the Texas Medical Association could not fully control health maintenance organizations under the provisions of this legislation, they consciously chose to kill it.” The HMO bills sponsored for the TMA by Senator Schwartz and Rep. Joe Allen merely would have added an unnecessary blessing to the operation of doctor-dominated HMO’s, since physicians already have authority to own and run health care facilities. Their bills expired quietly in committee, with no detrimental effects to the only version of an HMO presently operating in Texas, the physician-controlled Bexar County Medical Foundation in San Antonio. The battling physicians and consumer groups have alliances which spread their war into the insurance industry. The consumer groups is no doubt partly motivated by the insuror’s desire to market a new product that will help them recapture the proportionate share of health insurance premiums which they have lost to the Blue Cross-Blue Shield over the past few years. The Texas Insurance Fact Book 1973, published by U.T.’s Bureau of Business Research, reports that while life and property liability companies wrote 80.7 percent of all Texas health premiums in 1967, by 1974 their piece of the total market action had declined to 67.7 percent. Thanks largely to the influx of Medicare-Medicaid funds, non-profit hospital companies \(primarily Blue 32.3 percent of the total health premiums compared to 19.3 percent in 1966. The total dollar amounts involved are considerable. From 1966 to 1971, life and property liability insurers wrote $3.3 billion in Texas health insurance premiums and paid losses of $2.3 billion, giving the industry close to $1 billion in gross profits. Over the same period, non-profit hospital corporations, primarily Blue Cross-Blue Shield, collected premiums totalling about $1.2 billion and distributed benefits totalling more than $938 million, for a gross profit of more than $246 million. Except as shadowy indicators of the possible size of the net profits pie, gross profit figures are not very meaningful. The Legislature has not given the Insurance Board the power to gather net earnings data on health premiums written by life insurers, and the Board has not yet used its power to audit Blue Cross-Blue Shield. 12 The Texas Observer Therefore it has no net earnings figures on an industry which it is supposed to regulate. At any rate, it is probably safe to speculate that Prudential and other life insurers would not mind picking up a share of the Medicare-Medicaid largesse which has fattened the Blues. Precedent established in other states indicates that HMO’s may provide the insurance industry a mechanism for doing so. By contracting their actuarial and marketing services to an HMO serving Medicare-Medicaid recipients, life insurance companies can pick up at least administrative costs for handling all that lovely public money. To do so in Texas, of course, they will have to out-maneuver the TMA at the Dallas Regional Social Security Offices and at the State Welfare Department in Austin. The Blues, of course, won’t welcome such intrusions into their domain. It makes one wonder whether part of TMA counsel Phil Overton’s religious zeal in prosecuting his holy war against HMO’s reflects his allegiances as board member for the Cross and Shield. For now, the war is in Atty. Gen. John Hill’s back yard. If he follows the case law cited in Schwartz’s request for an opinion, Insurance Board jurisdiction over HMO’s will be overturned and Christie’s guidelines will be meaningless. In that case, Overton wins for a year and Prudential is out of the game at least until the Legislature comes back in 1975. Schwartz has high hopes for an opinion favorable to the TMA. Christie’s lawyer, Bob Clines, is equally optimistic that the Insurance Board guidelines are in full compliance with Texas law. But he concedes that it is possible just possible that someone might call him to court on the guidelines. If litigation were pending, Hill would not have to issue an opinion, since it would then become his job to defend the Insurance Board at trial. The complexity of Schwartz’s letter, which asks for an opinion on the legality of 11 different HMO models, assures the fact that the A.G.’s response will be a long time coming. It could be delayed until the Legislature returns. That would get Hill out of the difficulties of having to favor or cross the TMA. THE INSURANCE Board as a whole does not stand behind Christie’s “guidelines.” Regulations of such scope are usually issued as “orders,” which must be voted and passed by the Board. The guidelines came out of Christie’s office and so he rides the HMO tiger alone. The byzantine provisions of the guidelines demonstrate excruciating care was taken to move them to comply with . the law. They will be very hard for insurance companies to follow. Insurers interested in setting up prepaid plans may hustle doctors, hospitals, ambulance services and other health care providers for participation in the plan. But when they describe the benefits of such participation, they cannot discuss fees, because that would violate anti-trust laws. If they can’t talk about money, what other benefits can the insurance companies describe? The ground rules governing efforts to drum up consumer groups impose equally difficult restrictions: “The insurer in its solicitation shall not undertake to explain the exact services offered by a provider, the cost of such services, or the advantages or disadvantages of using any particular provider.” That pretty effectively reduces the scope of the conversation. Insurer groups are not allowed to act as go-betweens for the consumer and provider groups whom they contact about plan participation, since the establishment of such a close liaison would leave insurers and providers open to anti-trust action. Although insurers may “relate the existence of provider groups” willing to serve a group of prospective consumers, they are not supposed to give consumers the names of such providers. The burden of locating the interested provider then falls to the consumers. This area will be difficult to enforce. Clines admits that it may produce litigation from providers who do not find themselves included in major contracts. All of which may serve to explain why Prudential has not yet found either consumers or providers to participate in its plan. As one Prudential employee lamented off the record, “It’s like chasing an ice cube that’s always melting in your hand.” Life under the guidelines may be somewhat simpler for medical groups who wish to contract their services out. They are bound to the same rules of silence concerning price in preliminary efforts to lure consumer groups, but at least they will have facilities and personnel to display in their solicitation efforts. And providers may find it easy to locate willing insurer groups. A call to the Insurance Board would doubtless provide some leads. John Holden is the man to ask for. Representatives of consumer groups looking for insurers and providers willing to get together on a prepaid plan would be well advised to find themselves a sharp consultant who knows lots about actuarial rates and medical costs before taking any other action. One of the provisions of the guidelines allows insurers to renegotiate rates “every six months or more often.” Let the buyer beware.