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Wisconsin Insurance Commissioner Jo Musser credits an aptitude for math and science, a fondness for computers and wonderful mentors in helping her climb the career ladder two steps at a time.

During the past two decades, the former nurse ran an outpatient cardiac rehabilitation center before becoming a leading health care business executive overseeing an employer purchasing cooperative in the Madison, Wis., area.

The cooperative's success catapulted her to prominence and led Gov. Tommy Thompson to solicit her in 1993 to accept an open-ended appointment as the state's top insurance regulator.

Ms. Musser, 46, recently indicated that she will resign her state post Jan. 2, 1998. Wisconsin state law prevents her from discussing her plans while serving as commissioner, though published reports indicate she intends to run for a congressional seat in 1998.

While taking her career steps, Ms. Musser bolstered her bachelor's degree in nursing with two master's degrees, including a master of business administration degree from the University of Chicago. She earned it through the university's executive program while working full-time in Madison.

At the National Assn. of Insurance Commissioners, Ms. Musser also heads committees on health insurance and legislative policy, internal administration, financial condition as well as liaisons groups with industry representatives and consumers.

In Wisconsin, she also serves on several insurance-related state boards and councils and participates in some women-focused groups. Ms. Musser reflected on her career recently in an interview with Senior Editor Meg Fletcher.

What have you learned about the health care marketplace during your transition from nurse to business executive and then to state insurance regulator?

It occurred to me that, plainly speaking, health care providers didn't know enough or a great deal about business and the business community did not know enough about health care delivery systems.

So, I decided to be the bridge between the health care community and the business community to try to help each side view the other a little differently.

After obtaining my graduate degree in business, I worked as a consultant for a variety of companies, including heading the Madison-Area Employers' Coalition on a part-time basis and drafting its health care business plan.

In 1989, I was one of three women to establish the Employer Alliance Healthcare Cooperative in Madison. The business group, which developed a large database system, pooled its purchasing power to successfully negotiate contracts with health care providers. That meant dealing with a "mature health maintenance organization market" of vertically integrated health care systems.

Throughout, I was intrigued -- and still am -- by the economics of health care delivery systems, employment and benefits.

What do you like best about being insurance commissioner?

The learning. I love what I learn. I like sitting down at the table and talking with people about Codification Issue Paper 46 or various other things. I just love it.

The corollary to that is I can't stand not knowing what I'm talking about. I'm very uncomfortable if I don't (know), so I put as much time as I can into learning the issues before I open my mouth.

I've learned so much about politics, people, the technical side of these things. I've learned a great deal about just wonderful people, my colleagues, the insurance commissioners across the country. I value their counsel and their friendships and their support. They are such good, dedicated, committed people -- they are amazing.

Have individual consumers been helped or hurt by the transition from fee-for-service to prepaid capitation, an increased emphasis on cost-efficient care, and health care provider consolidation?

Consumers have been predominantly helped and the delivery system has been predominantly enhanced, but the potential for harm is there.

When you talk about fee-for-service to prepaid, obviously you have to balance the patient interest and the economic interest, and to the extent that the care that they receive is good care, the help has more potential than the harm. To the extent that the economic interests of some groups may outweigh the patients' interest on any given day, that is a great potential for lower quality and harm. I generally believe, certainly in this community, that the consumers have gained tremendously.

I think that the quality of care and access to care in this community and this state is very high and it has remained high in the face of cost pressures, aided by near-full employment. Costs have gone down, relative to national costs, more so than in nearly every state.

In a state like Wisconsin, which has very little unemployment, health care providers' emphasis on cost-efficiency doesn't impact quality and access because the competing companies want to provide good benefits. It is to everybody's benefit.

In general, consolidation is good. There are lots of economies of scale, especially in data systems and benchmarking and best practices that small, independent physician groups really can't achieve. However, when consolidation reaches the point of establishing monopolies, obviously that hurts the patient and price competition goes down. Our motto here is to have a healthy competitive environment, which stops short of major consolidation but includes mature and sophisticated health care services.There is more than enough confusion and chaos to go around. I think that consumers and legislators are hurt by a lack of clarity.

For example, a point-of-service plan in Kansas City, Mo., is almost the opposite of a POS in Wisconsin, in terms of restrictions on the networks and the incentives. And it's amazing when I talk to people and I'm assuming they are talking POS the way I know POS, and it's not. You can hardly even communicate, even with congressmen during hearings. To some, a PSO (physician service organization) in their state is an HMO in Wisconsin; 18 of our 26 HMOs are owned by physicians.

The way out of this alphabet soup is functional regulation, which is the basis for Wisconsin's regulation.

What can employers do to improve the way their employees are treated?

It's a lot easier for large employers than small employers because large employers have the resources and sophistication to manage operations' costs. Small employers lack resources and sophistication but can overcome some of that by coming together in groups like business coalitions and sharing data management services, reports and expertise. The agent community and the health manager community are really invaluable.

Businesses in general can greatly improve the environment for employees just by paying attention. It's almost like the old Hawthorne effect, where just by having the CEOs sit at the table or having the large employers and small employers get together and ask a few questions generates an amazing accountability that is brought to bear on the situation.

Employers' questions should start with costs because quality is still a very elusive concept. Consumers, physicians, legislators each have their own definition of what that term means.

Maslow's concept of a pyramid-shaped hierarchy of needs serves as a useful analogy to health care needs and people's perception of quality.

Just as a person's most basic need is food and shelter, a health care consumer would probably say his basic need is for simple, straightforward things like claims being paid and access. However, a lot of insurance people, including me, think that the basic level is solvency because if there is no one there to pay the claim, it does-n't matter what's on top of the pyramid.

As health care consumers have their needs met, you move up into more sophisticated levels. People move up to asking about how diabetes is managed or what are typical heart surgery morbidity and mortality rates.

Please discuss some of the NAIC's significant internal issues, including the voluntary nature of its funding source, program budgeting and working with an industry liaison committee.

The extent to which the voluntary nature of the NAIC's funding source is a concern is inversely correlated with the amount of federal pressure to federalize insurance regulation.

The commissioners most concerned about it are involved with major NAIC projects such as codification or the financial database re-engineering or IRIN (Insurance Regulatory Information Network), which require spending $1 to make $5 for the insurance community and to advance regulation.

To the extent that the boycott on database fees was used as a way to exert control over regulators, I think the lasting effects hurt the industry a great deal more than it hurt the NAIC, in terms of the impact on trust and accountability.

The NAIC is such an extraordinary bargain for the industry, when compared with the cost of an insolvency or the bad public relations caused by the churning of life insurance policies. They know that and we know that.

Program budgeting per se is a term of art, not a term of science. I don't think it was primarily driven by industry critics, but rather by our own need.

The liaison committee provides a forum where insurers are being heard. The largest point of contention between the industry and myself was to have member companies at the table instead of just trade associations. I can't underscore enough how pleased and satisfied I am at having the member companies at the table and see firsthand the NAIC process and meet the commissioners personally. A lot of information was getting lost in translation between associations and their member companies.

Now, with this group and consumer board, there is a much higher level of trust, understanding and support for NAIC involvement in broader issues such as encouraging state input into insurance-related issues on Capitol Hill.

What are the important external issues the NAIC is facing, including federal efforts by doctors, multiple employer welfare associations and banks to avoid state regulation.

For most of those groups, federal regulation means less regulation and that, in fact, is what they are seeking. Physicians entered the market late and are now looking for special regulatory treatment and have not yet learned that harms everyone eventually. There will be bankruptcies, there will be insolvencies and consumers will be left unprotected.

Overall, if I have been struck by anything, going to the Hill, it is how narrowly they interpret our existence, our technology, our financial databases. They do not understand the sophistication and expertise of the state insurance departments.

What does the move toward closer links between banks and insurance through financial modernization mean for the NAIC?

The NAIC's future doesn't include membership by regulators of broader financial services. It is true that the regulatory framework of insurance regulation doesn't align itself neatly with banking and securities oversight and there are conflicting and competing regulatory goals. I am not certain where it will lead, except I don't think that anyone will have the shortsightedness to get rid of state regulation of insurance. It has to be built upon rather than gotten rid of.

Federal regulatory oversight is not the answer because we will lose too much in consumer protection. But it is becoming a global marketplace and the state framework does not neatly align itself with the international forces.

Yet, the European Union's effort to open borders could learn a lot from the NAIC's accreditation program, which helped break down barriers among states. A lot of people try to frame it as a turf battle and it's not; it's about consumer protection and regulatory sophistication and the support that the NAIC members provide to each other.

We are the world's largest insurance marketplace. We cannot afford to have other countries make the rules. We must be represented.

Are there any other trends you have observed in state regulation of insurance?

A lot of resources need to go toward educating people about what we do, which is primarily consumer protection. There is also an increased sharing of resources by state insurance regulators through the NAIC.

What has been your contribution to the health care marketplace and state regulation, especially for today's market.

What I have been able to contribute is a respect for the uniqueness of every state and its individual condition, although I know Wisconsin has more sophisticated systems than most states. At the same time, I know that one-size-fits-all regulation would be unwieldy.

However, I am still frustrated by a general lack of progress in determining quality of care. Our data systems have improved, but we still don't know what consumers need and want to know to make an effective market.