HMO PREMIUMS CUT IN COLLECTIVE APPROACH SUPREME COURT

SAN FRANCISCO-A recent study provides new insight into the Pacific Business Group on Health's approach to saving member employers millions of dollars through collective negotiations with HMOs.

The study, published in the Winter 1995 issue of Health Affairs, reveals that in 1994, before collective negotiations, 11 member employers made payments to HMOs ranging from $1,544 to $1,958 per employee.

But analysis showed that differences in benefit packages, risk mix and volume of purchasing accounted for only one-third of the premium variation. The rest was unexplained, said James Robinson, a University of California at Berkeley professor of health economics and the study's author.

"What was going on is there is a lot of variation in what employers are paying for health insurance," he said. "It is not based on any kind of data or cost information. It's simply that health plans are charging what the market will bear, and what the market will bear is based in large part on purchaser ignorance. In collective alliance, the first thing (PBGH members did was) they put their prices side by side."

Through comparison and collective negotiations, the employers were able to eliminate the discrepancies between their payments to the same HMOs, Mr. Robinson said. For 1995, negotiations for the 11 employers resulted in 9% savings in premiums, or $161 per person covered, which totals $36.5 million for all the employers.

Pacific Business Group on Health is a non-profit organization that represents 28 health care purchasers, which provide benefits for more than 2.5 million people. The PBGH realized an additional 4.3% in savings for 1996, or $17 million.

WASHINGTON-The Supreme Court earlier this month ruled in one narrow product liability case and declined to review two others of interest to risk managers.

In a product liability case, the court held in Yamaha Motor Corp. vs. Calhoun that lawsuits over certain watercraft accidents-those that do not involve professional mariners and occur in state territorial waters or less than three miles offshore-are governed by state tort law, not federal maritime law.

Separately, the court declined to review a ruling from the 7th U.S. Circuit Court of Appeals in Employers Insurance of Wausau vs. Browner that parties must comply fully with Environmental Protection Agency cleanup orders before seeking reimbursement from the government.

Also, the court without comment declined to review a 10th U.S. Circuit Court of Appeals ruling in Robinson vs. Audi that an attempt to invalidate a product liability ruling on the basis that defense lawyers had defrauded the court required proof that deliberate fraud had occurred, not simply proof of a "reckless disregard for the truth."