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HEALTH CARE COMPANIES are talking rates up again and, unfortunately, many employers will do nothing but reach for their wallets.

It is unfortunate because employers still have alternatives and, thus, leverage with the market. It's also unnecessary in many cases, because there is still inefficiency to be wrung from the system -- both in terms of plan design and choosing a more efficient plan provider -- before employers start having to pay higher medical costs again.

Health maintenance organizations are expected to hike rates in the 2% to 6% range, with most falling in the 3% to 5% range. Point-of-service plan rates generally will be one to two percentage points higher. For traditional indemnity plans, employers in 1998 can expect rate increases of 8% to 15%. Preferred provider organization rates are expected to rise 8% to 12% in 1998.

It is worth noting that for the 12 months ending Oct. 31, the medical component of the Consumer Price Index is up 2.5%. So where do those added percentage points come from? Inefficiency, for the most part.

Indeed, many of the managed care companies seeking rate increases are trying to offset bad pricing decisions in recent years, soothe indigestion from recent acquisitions or make up losses from business errors, such as recent computer troubles cited by Oxford Health Plans Inc. and PacifiCare Health Systems Inc. Should employers have to pick up the tab to bail out insurers for those kinds of mistakes?

Many health plans are also looking to raise rates under pressure from Wall Street analysts and investors. The drive to make higher profits for shareholders, however, comes directly out of the pocket of health care payers.

Although profits are certainly necessary to attract capital and make investments in new technology, health plans have to achieve a balance between satisfying customers with reasonable rates and appeasing shareholders with reasonable returns.

Employers have the power to reject pricing decisions that strike them as unfair, because they do have alternatives.

Some employers, for example, are of a size that they have enough clout to negotiate cost increases more in line with medical inflation. Those that aren't still can band together in purchasing coalitions to wield more clout. Witness the Pacific Business Group on Health, a West Coast coalition that has held its rate increases for HMOs this year to 1% on average.

For employers that believe their health plans are scrambling to appease their shareholders more than their customers, there are still plenty of not-for-profit health plans out there without those same shareholder pressures. Although they may lack the resources of their for-profit competitors, with more employer support, perhaps that would change.

Also, plenty of inefficiencies still can be eliminated from current plan design. Roughly one-fourth of all eligible employees still are enrolled in indemnity plans, the absolutely least efficient health plan option. Employers that offer such plans are essentially giving their employees carte blanche to see whatever doctor they choose at whatever the cost.

Companies that fail to move their employees to some form of managed care perhaps deserve what they get.

Even a relatively mild form of managed care, such as a preferred provider network, offers the payer an opportunity to negotiate discounts and obtain utilization review while still affording employees a choice.

Point-of-service options offer even more savings, with capitated payments and gatekeepers, while still offering a choice of providers to participants who want to pay for that option.

HMOs offer the greatest potential savings, yet enrollment has stagnated at about 27% of eligible employees. While HMOs are more restrictive than other forms of health care, overall patient satisfaction in these plans is consistently reported to be high.

While picking a plan with more built-in cost controls is a start, many health care plans -- including HMOs -- still can do more to deliver cost-effective health care, and by cost-efficient, we don't mean low-quality.

Many health care plans, for example, don't take basic measures, such as providing free screenings to detect conditions like high-blood pressure or diabetes, which if undetected can lead to enormous health care bills.

Many health plans are not doing something about the escalating cost of prescription drugs by, for example, establishing formularies and encouraging more use of generic alternatives.

Many health care plans don't get actively involved in case management before a claim reaches six figures.

Many health care plans -- and for that matter, employers -- don't play an active role in the legislative arena and use their considerable influence to prevent state and federal legislators from passing benefit mandates that can drive up costs but do little to ensure that better care is delivered.

In short, there is much more inefficiency to be wrung from the system before employers run out of cost-saving options and face sharply higher rates.