[Congressional Record Volume 144, Number 107 (Monday, August 3, 1998)]
[House]
[Pages H6983-H6988]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE DIFFERENCES BETWEEN THE DEMOCRATS' PATIENTS' BILL OF RIGHTS AND THE 
                        REPUBLICAN HMO PROPOSAL

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from New Jersey (Mr. Pallone) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, this evening I would like to spend some 
time talking about the issue of managed care reform, or HMO reform. I 
wanted to start out by pointing out that the House Republican leaders 
brought a bill to the floor about 2 weeks ago which they are trying to 
use to essentially dupe Americans into believing that they are 
protected against HMOs, when in fact, if anything, the Republican bill 
makes people's situation with HMOs even worse off, in my opinion.
  There were no hearings on this Republican bill. It never went through 
any congressional committee, and it was literally changing up until the 
very last minute, when it came to the floor of the House of 
Representatives.
  For months Republicans have been working hand-in-hand with insurance 
companies to fight the Democratic alternative, the Patients' Bill of 
Rights, which is a real patient protection bill, which enjoys the 
strong support of doctors, nurses, and consumer advocates.
  Now all of a sudden the Republicans have rushed their bill, which 
they call a patient protection bill, to the floor in an effort to solve 
the political problem that their opposition to managed care reform has 
essentially become. Mr. Speaker, make no mistake, the differences 
between the Democratic Patients' Bill of Rights and the Republican HMO 
proposal are significant.
  The Republican bill excludes key provisions that are essential for 
consumer protection, and includes provisions that would reduce current 
consumer protections. The Republican HMO plan seeks to give the 
appearance of reform without the reality.
  Just to mention, among other things, some of the most serious 
problems with the Republican HMO plan, it leaves medical decisions in 
the hands of insurance company accountants instead of doctors. It does 
not limit HMOs and insurance companies' use of improper financial 
incentives to limit needed care. It allows drive-through mastectomies, 
and fails to contain a requirement of coverage for reconstructive 
surgery after mastectomies.
  It does not give access to specialty care when needed. It also does 
not guarantee patients access to needed drugs or clinical trials. Most 
important, it provides no effective mechanism to hold plans accountable 
when plans abuse, kill, or injure someone.
  Democrats have been insisting and will continue to insist on a bill 
that contains guarantees that are a significant gain for health plan 
consumers. The Republican plan, by contrast to the Democratic plan, is 
essentially a sham in providing patient protections.
  Mr. Speaker, I wanted to talk for a few minutes, if I could, about 
some of the specific problems that I see with the Republican HMO plan, 
and give some examples of how they essentially would not help.
  For example, one of the most important provisions in the Republican 
bill that contrasts it from the Democratic Patients' Bill of Rights is 
that the Democrats' Patients' Bill of Rights insures access to 
specialists, whereas the Republican plan does not.
  For example, under the Democratic bill, if you had cancer, you could 
go directly to an oncologist. If your child had a specific problem, you 
could bring your child to whatever type of specialist your child might 
need. Under the Republican plan, you would still have to go see your 
primary care physician for a referral, and there is no guarantee that 
you would get to see a specialist if you needed one.
  The differences between the two bills are even more pronounced when 
it comes to seeing specialists outside your HMO, outside your network. 
The Democrats' Patients' Bill of Rights ensures you will be able to go 
outside your network at no cost to you if you need to see a specialist 
that your HMO does not have within the network. But under the 
Republican bill, if you need to see a specialist outside of your 
network, you are out of luck. You do not get to see him.
  Another difference between the access each bill would provide is what 
we call ``standing referrals.'' If you were fortunate enough to be in 
an HMO that has the type of specialists you need when you get sick 
under the Republican plan, you still have to jump through hoops. The 
Republican plan does not allow patients who need care over a long 
period of time by a specialist to have standing referrals. The 
Democratic bill, the Patients' Bill of Rights, does not require 
patients to go back time and again to renew referrals. If you need to 
see a specialist over a long period of time, you are guaranteed the 
right to that doctor.

  The Democrats' Patients' Bill of Rights will also let you designate 
the specialist as your primary care physician. If you are a woman, you 
can choose your OB-GYN as your primary care physician. The Republican 
bill, by contrast, neither allows you to designate your specialist as 
your primary care physician nor your OB-GYN.
  Another major difference, and I think it is important, refers to 
access to physicians, again. That is, what the two bills do to protect 
the continuity of care.
  The Democrats' bill ensures that if you were in the middle of 
treatment and your plan drops the doctor that you were seeing or your 
employer switches insurance companies, that you will still be able to 
see that doctor at no cost to you. But under the Republican bill, if 
you are a woman in your last trimester of pregnancy, for example, you 
could be forced to see another doctor once that doctor is dropped from 
the plan. The same goes for any patient in similar circumstances.
  The differences in ensuring access between the two bills is not 
limited to just physicians. Under the Democrats' Patients' Bill of 
Rights, health plans are required to have a process for allowing 
certain patients to participate in a defined set of approved clinical 
trials.
  For many patients, clinical trials represent the last and only hope 
they have of surviving. But the Republican plan provides no access to 
clinical trials at all. If you are in an advanced stage of breast 
cancer, for example, the Democratic bill would give you not only the 
opportunity but the resources to fight that horrible disease. I do not 
see how the Republican bill does anything of the sort.
  One last difference I would like to point out in terms of access is 
access to needed drugs. The Republican plan does not guarantee that 
your HMO will pay for the drugs your doctor prescribes. If your doctor 
prescribes you a drug that is not on your HMO's approved list of drugs 
under the Republican plan, you will have to pay for it yourself. If it 
is too expensive for you, that is too bad. Even though you have health 
care, you find the prescribed remedy out of reach because the health 
plan you pay for refuses to cover it.
  The Democrats' Patients' Bill of Rights, on the other hand, 
guarantees access to whatever medication your

[[Page H6984]]

doctor determines that you need. The Democrats' bill requires plans 
that have a limited set of drugs available to provide patients with 
access to drugs that are medically necessary.
  As I said, Mr. Speaker, really, the facts tell the story. When we 
compare these two bills, we find there is no comparison at all. 
Basically, the Republican bill does little to expand access and a lot 
to protect the insurance industry. Really, I think we should be helping 
patients get the care they need without the red tape and without the 
added trauma of wondering just how much sicker they are going to get, 
and have to wait for some bureaucrat somewhere to tell them they can 
see a doctor or have the medicine they need. If we want to address 
those problems, then we have to pass the Democrats' Patients' Bill of 
Rights.
  I wanted to mention another area that I consider a very important 
difference between the two bills. Then I will try to wrap up what I 
have to say tonight. That is, in my opinion, one of the most important 
aspects. That is the issue of enforcement.
  The point is clear that under the Democratic proposal, the Patients' 
Bill of Rights, we are getting certain patient protections. Under the 
Republican bill, we are getting very few patient protections. Even if 
there were some patient protections that were important under the 
Republican bill, it does not mean anything if we cannot enforce those 
patient protections and make sure we get them. Any legislation that 
fails to give patients the right of enforcement essentially renders the 
protections within the bill absolutely meaningless.
  The Democratic bill, most importantly, repeals the ERISA exemption. 
This is the 1974 law that shields HMOs from being sued if they deny 
people needed care. A lot of people do not realize that if your 
employer has a self-insured plan, which many people have, and they fall 
under ERISA, which is a Federal law, that basically says that the HMO 
cannot be sued if it denies people care.
  We repealed that, essentially, effectively, in the Democratic bill. 
The Republican bill, however, does nothing to hold HMOs accountable for 
their actions. It not only leaves ERISA essentially intact and still 
has the prohibition on suit, it actually exacerbates the problem, 
because its external appeals process, in other words, the ability to 
appeal the denial of care, only applies to people whose insurance comes 
under ERISA.
  Individuals in the private insurance market are left without any 
external recourse when they are denied care, and what is even worse is 
that those who were fortunate enough to be covered by ERISA are subject 
to the HMOs' definition of ``medical necessity.''
  I just wanted to talk a little about that, because it goes to the 
whole issue of enforcement. What the Republican bill does, it allows 
the HMOs, and not the doctors and patients, to define ``medical 
necessity.'' Of course, this provision flies in the face of the whole 
idea of the managed care reform debate, that ``medical necessity'' 
should be the determinant of whether or not a patient needs care, and 
not cost considerations.
  So if we are really going to make reforms in HMOs and managed care, 
we have to make sure that doctors and patients decide what type of care 
is necessary, whether you have to stay a few extra days in the 
hospital, whether or not you need a certain procedure. But if the 
insurance company bureaucrats continue to make those medical decisions, 
people will continue to be denied care. That is what is going to happen 
with the Republican bill, because it lets the HMOs and not the doctors 
and patients define what is a ``medical necessity.''
  I also want to dispel a myth that my Republican colleagues have been 
working overtime to spread. That is that the Democrats' Patients' Bill 
of Rights does not create any new Federal litigation.

                              {time}  2200

  In other words, if you repeal ERISA, as we do, all that allows is for 
individuals to go back to the States and bring the kinds of suit they 
would normally be able to bring. So we are not really creating a new 
Federal remedy by repealing ERISA and allowing people to sue. We are 
just allowing people to exercise the rights that they would normally 
have if the Federal Government had not prohibited them from bringing 
suit under ERISA.
  Some of the other points that could be made with regard to 
enforcement of the Republican bill I do not think I need to go into 
tonight. I just want to stress again that if you have patient 
protections and you cannot enforce them, either through some external 
review process or through the ability to go to court and bring suit, 
then for all practical purposes, whatever patient protections you have 
under the Republican bill really are meaningless.
  If I could, Mr. Speaker, the last thing that I wanted to bring up 
tonight is the whole issue of cost, because I know that my colleagues 
on the other side of the aisle continue to talk about how if we put in 
place the Democrats' Patients Bill of Rights, which is a comprehensive 
patient protection act, that somehow it is going to cost more and it is 
going to drive the cost of HMOs up. Nothing really could be further 
from the truth.
  We had the Congressional Budget Office do an analysis, if you will, 
of the Democrats' Patients Bill of Rights. What they basically said is 
that the legislation would have a very minimal effect on premiums with 
most individuals paying only about $2 more per month. Keep in mind that 
for an extra $2, and it probably would not even be that much, you are 
going to get the return of medical decisionmaking to patients and 
health care professionals and not insurance company bureaucrats. You 
are going to get access to specialists, including access to pediatric 
specialists for children. You are going to get coverage for emergency 
room care. You are going to get the right to talk freely with doctors 
and nurses about every medical option. You have an appeals process and 
real legal accountability for insurance company decisions, and you have 
an end to financial incentives for doctors and nurses to limit the care 
that they can provide.
  These are the kinds of patient protections that we are providing with 
the Democratic bill. I know that when I talk to most Americans, and 
certainly, or most of my constituents, and certainly the polls have 
shown both Democratic and Republican polls, that when you talk to most 
Americans, they would rather have those protections. They would like to 
be able to go to the emergency room nearby and not have to worry that 
they are not going to be approved because they did not get a referral 
or that they have to go to an emergency room 50 miles away. They do not 
want the doctor to be gagged as some doctors are now with HMOs and told 
they cannot even tell you about certain medical options.
  They do not want doctors and nurses to be under a regime where if 
they do not meet assert quota, if they do not deny a certain number of 
cases or a certain number of procedures, that they will not get paid 
enough for their work. We know that the average American would not mind 
paying an extra dollar or two per month to have the kind of protections 
that we are talking about here tonight.
  Mr. Speaker, I would just say, in conclusion, that, of course, the 
Republican bill passed the House of Representatives a couple weeks ago 
but very narrowly. The Democratic proposal, the difference between the 
two was only about 5 votes. I think that shows very strong support in 
this body for strong patient protections that are enforceable. I only 
hope that when the legislation goes over to the Senate and that when 
the Senate reconvenes in September, the Senate will take up the 
stronger Democratic bill and that we will see a strong bill pass this 
Congress, pass both houses of this Congress, because President Clinton 
has said over and over again that if he gets the Republican version on 
his desk, he will veto it because it essentially does not provide the 
type of patient protections that we need to really have some 
significant managed care reform.
  If it is necessary for the legislation to come back to the House or 
back to the Senate after the President's veto, we know that we are 
going to have the support here to pass a strong bill because of the 
vote that took place on the floor of the House of Representatives two 
weeks ago.
  I see one of my colleagues is here who has been a strong supporter of 
the

[[Page H6985]]

Democrats' Patients Bill of Rights, who is a member of the Committee on 
Commerce, the gentleman from Texas (Mr. Green), where they have on the 
State level passed very strong patient protections, but one of the 
things that we know, because New Jersey, my State, is another State 
that has passed State legislation that provides strong patient 
protections, but unfortunately many people are not covered by State law 
because, again, of the ERISA statute that I mentioned previously. 
ERISA, which applies to all employers that essentially self-insure, 
that is a big group in this country, ERISA essentially preempts State 
law. So that is the reason why, one of the reasons why we have to pass 
Federal legislation for even those States that do have strong patient 
protections to make sure that everybody is covered. Of course, also to 
take care of the States that have not passed strong patient protection 
legislation. That is why we need comprehensive Federal legislation.
  I yield to the gentleman from Texas (Mr. Green).
  Mr. GREEN. I thank my colleague from New Jersey for allowing for this 
special order this evening and asking for the time, and I thank the 
gentleman for yielding to me.
  I want to make a few points, because I think the gentleman led into 
the concerns I had with the bill that we passed, literally, on the 
Friday of the tragedy that occurred here in the Capitol, make a few 
points about the Republican majority bill, a bill that we talked about, 
the Democratic plan actually had bipartisan support. The Republican 
bill would do to state passed, State protections like Texas has done, 
and share with you some of the concerns that have been raised by 
officials in my home State.
  Very simply, it would destroy some of the local initiatives that we 
have seen in the State of Texas. I do not know if that is true in New 
Jersey or other parts of the country, but the Republicans so-called 
Patient Protection Act would really be called the Patient Protection 
Elimination Act.
  First, let me refer to a letter from our State comptroller, John 
Sharp. He writes, literally on July 29, after the bill was passed, The 
following question should be asked of anyone considering supporting 
this bill, the HMO reform conference committee report. Will the Federal 
legislation preempt Texas's current managed care protection laws? Will 
Federal legislation preempt Texas' HMO Legal Accountability Act? Is 
there a Federal floor that States may improve upon, or will new Federal 
legislation create a ceiling and preempt Texas from enacting tougher 
patient protection laws?
  For example, would the Federal legislation erase the Texas gag clause 
legislation as well as the gag clause legislation in other States and 
provide a weaker substitute nationwide? Does the Federal legislation 
preempt Texas OB/GYN direct access bill and substitute weaker language 
that permits direct access for routine care? Will the Federal 
legislation be the final word on managed care accountability, or will 
Texas and other States experiment with different kinds of approaches 
such as their own external review process?

  Because, again, this is quoting from John Sharp, Comptroller of 
Public Accounts, I will put it into the Record. I am reading from the 
verbiage because the Gingrich supported HMO reform legislation is 
silent on many more kinds of patient protections enacted into Texas. 
Are those protections also preempted or nullified by this legislation?
  Will this proposed bill erase Texas laws protecting patients and 
doctors from retaliation by a plan or due process provisions for health 
care providers or continuity of care that guarantees after a provider 
has been deselected?
  These are just a few of the questions that Comptroller John Sharp 
raised. We just received this letter today. It was dated at the end of 
last week and, again, because of the tragedies that we saw here happen 
that Friday afternoon, I do not think a lot of Members have thought 
about what Congress did pass that day.
  Let me talk about a letter from a person who I served with when I was 
a State representative and a State Senator. John Smithee is a 
Republican State representative from North Texas, Armstrong, Deaf 
Smith, Oldham and Randall Counties which is very far north in Texas.
  He writes, again on the 22nd of July, We are writing to respectfully 
urge, and he is writing not only himself but also David Sibley, 
chairman of the Senate Committee on Economic Development for the State 
of Texas, and John Smithee is the chairman of the House Insurance 
Committee and, by the way, both these members in the legislature in 
Texas are Republican members.
  And they write, we are writing to respectfully urge that in the 
course of your deliberations on managed care and patients rights, you 
do not disturb the substantial progress already achieved in Texas. As 
chairman of the committees of jurisdiction over insurance and managed 
care in Texas, we have presided over hundreds of hours of public 
hearings on every conceivable aspect of managed care. I doubt there is 
an argument or threat that we have not heard in the course of the 
legislative lobbying, advertising or debate. The 75th legislature, the 
one this 1997, both Representative Smithee and Senator Sibley 
cosponsored the legislation and, along with many other colleagues in 
their House and Senate, some of the most comprehensive and sweeping 
managed care reforms in the country. They have not had the opportunity 
to review fully the Federal managed care legislation that was selected, 
scheduled for debate in the House, but judging from the news reports 
and their own preliminary analysis it appears that the deliberations 
are following an identical pattern as the debate in Texas, especially 
regarding medical liability.
  While we intend to provide a more detailed analysis of the impact as 
it proceeds to conference, we respectfully submit the following 
observations.
  HMO accountability. The Texas legislature, in 1997, in a strong 
bipartisan display established a legal duty on the part of managed care 
organizations to exercise ordinary care when determining medical 
necessity. Aetna Insurance filed suit against the State of Texas 
claiming that the Senate bill was preempted by Federal ERISA. Ideally, 
Federal legislation should clarify ERISA does not preempt a State's 
right to determine health plan accountability and quality.
  If such clarification is not achievable, we suggest that the Texas 
congressional delegation push for Texas as a designated national pilot 
project for 3 years so the experiences can be measured and evaluated by 
future Congresses. We know what happened on that Friday and we know 
that there are cases where the experiments and the innovative 
techniques that a lot of our States are using, particularly Texas, will 
not stand the muster of the bill that passed this House.
  Also they ask for an independent review in item 2. It is our 
understanding that H.R. 4250, the House GOP bill, would weaken Texas 
independent review provisions. Again, these are a Republican State 
Senator and a Republican member of the State legislature, State House. 
Apparently H.R. 4250's independent review is not binding compared to 
Texas law that requires managed care organizations to provide the care 
deemed appropriate by the independent review organization. Once again, 
the Texas legislature's preference in this regard was overwhelmingly 
stated in 1997.
  Number 3, this is the last one of Representative Smithee and Senator 
Sibley's letter. We are also concerned that H.R. 4250 weakens current 
Texas law regarding emergency care and gag clauses. As we understand 
it, the bill waters down Texas prudent layperson by allowing a health 
plan to override the treatment decision by the emergency department 
physician. The gag clause provision does not protect health care 
providers from retaliation when they act as advocates for their 
patients.
  They end it by saying, we know you are hearing from many points of 
view on managed care. Thank you for considering our comments on Texas 
law. And that copy was sent to Governor Bush and also to the whole 
Texas delegation.
  My concern and a lot of Members' concern is what the House passed as 
HMO is a sham. What it is actually doing is taking a step backwards 
from States who have made efforts to try and control it in their own 
States, like Texas has and I think New Jersey has and other States. So 
what we are doing

[[Page H6986]]

is taking away States' rights. It is ironic that as a Democratic member 
that I am concerned about Congress taking away States' rights, but that 
is what happened, I think, in H.R. 4250. And I am really surprised that 
some of my Republican colleagues would allow that to happen here on the 
floor when so often we talk about the importance of states being the 
experimental, the embryo, the way to say, okay, we have a problem with 
HMOs, we have a problem with education. Let us see what the States are 
doing.
  We have 50 laboratories out there. Yet in Congress, in H.R. 4250, we 
are deciding what is best for the State of Texas and New Jersey, even 
though those legislators made some tough decisions, as Representative 
Smithee pointed out and Senator Sibley pointed out. They made some 
tough decisions and went forward with it.
  While many Republicans here in Washington keep saying real reform is 
too expensive and would be too great a burden on insurance companies, 
it is important to note that similar provisions in Texas raised 
premiums only 34 cents per month per member. I would not mind going to 
any constituent in my district and saying, for 34 cents, would you like 
to have your doctor have the ability to talk to you about your health 
care needs, even though your HMO may not cover it so we can eliminate 
the gag clause? Would you really like to have a swift and sure external 
and internal appeals process for 34 cents a month, 34 cents a month? 
Would you really rather not have the decision made by you if you go to 
an emergency room?

                              {time}  2215

  If someone has chest pains and they go to that emergency room and the 
doctor says, well, I am sorry, those chest pains were really gas. And 
the doctor asks what they had for dinner, and they probably had some 
good Mexican food that we have in Texas, and that probably caused them 
to have gas. But that person could have been having a heart attack. But 
for 34 cents people would be willing to pay to make that determination 
themselves with that doctor in that emergency room.
  That is why I think we need to continue to call the American people's 
attention to what happened on that Friday here on the floor of this 
House. The tragedy that happened outside these doors we all pray about 
and we support those families, but I am concerned that what happened on 
the floor of this House that Friday, with the passage of that bill, 
will not only not help Americans but it will set back the States who 
have made progressive efforts to try and provide that ability to their 
patients and to their providers and their physicians: The right to sue 
an HMO if they are inappropriately denied care; to have access to a 
binding independent review; to communicate freely with the provider 
without fear of retaliation against the doctor; and utilize emergency 
room services if an individual experience symptoms that a prudent 
layperson would consider an emergency.
  And again, what does it cost? Thirty-four cents per patient per 
month. We hear all sorts of huge costs. In fact, I heard from this mike 
that day people saying how our bill does not cost anything. I heard it 
time and time again. It doesn't cost anything because it takes away 
rights. No wonder it does not cost anything. It takes away rights. We 
do not get something for nothing, but for 34 cents under Texas law they 
are providing those protections.
  And I would hope that we would see our way clear that when this bill 
goes to the Senate they would reform H.R. 4250, and maybe the 
conference could even make some changes with the encouragement and 
working with the administration. But I would hope when we get another 
vote on that bill in a conference committee report that it will be a 
much better product for our constituents than what we sent out here 
that Friday that all of us regret the tragedy that happened that day.
  And, again, I want to thank my colleague from New Jersey. I cannot 
say it enough; that for the small cost that we are seeing in Texas for 
these rights, why we cannot on this floor of the House do as well as 
the State legislature in the State of Texas, why we cannot do as well 
as the legislature in New Jersey and as well as many of the State 
legislatures all over this country, because, as my colleague pointed 
out, they only affect insurance companies that are licensed by the 
State of Texas. They do not affect employers in my district who are 
multi-State employers who have to come under Federal law because there 
is a plan in Houston and a plan in New Jersey. They do not want to have 
to comply with two laws.
  So we need to provide those protections, and I again thank the 
gentleman for allowing me to be here tonight and to speak.
  Mr. Speaker, I provide for the Record the letters from both John 
Sharp and John Smithee and David Sibley. I read most of them into the 
Record, anyway.

                                               The State of Texas,


                                     House of Representatives,

                                        Austin, TX, July 22, 1998.
     Hon. Gene Green,
     House of Representatives,
     Washington, DC.
       Dear Representative Green: We are writing to respectfully 
     urge that, in the course of your deliberations on managed 
     care and patients' rights, you not disturb the substantial 
     progress already achieved in Texas.
       As chairmen of the committees that have jurisdiction over 
     insurance and managed care in Texas, we have presided over 
     hundreds of hours of public hearings on every conceivable 
     aspect of managed care. I doubt there is an argument or 
     threat we haven't heard in the course of legislative 
     lobbying, advertising, or debate. In the 75th Legislature, we 
     authored, along with many of our colleagues, some of the most 
     comprehensive and sweeping managed care reforms in the 
     country.
       We have not had an opportunity to fully review the federal 
     managed care legislation that is scheduled for debate in both 
     chambers of Congress this week. But judging from news 
     accounts and our own preliminary analysis, it appears that 
     the deliberations are following an identical pattern as the 
     debate in Texas, especially regarding managed care liability. 
     While we intend to provide a more detailed analysis of the 
     impact of the congressional legislation as the bills proceed 
     to a conference committee, we respectfully submit the 
     following observations at this time.


                         1. HMO Accountability

       As you know, the 1997 Texas Legislature, in a strong 
     bipartisan display, enacted S.B. 386, which establishes a 
     legal duty on the part of a managed care organization to 
     exercise ordinary care when determining medical necessity. 
     Aetna has filed suit against the State of Texas claiming that 
     S.B. 386 is preempted by federal ERISA. Ideally, federal 
     legislation should clarify that ERISA does not preempt a 
     states right to determine health plan accountability and 
     quality. If such clarification is not achievable, we suggest 
     that the Texas Congressional Delegation push for Texas to be 
     designated as a national ``pilot project'' for three years so 
     that the experience can be measured and evaluated by a future 
     Congress. We would respectfully urge you to oppose any 
     language that would jeopardize, weaken, or preempt Texas' 
     S.B. 386.
       The extravagant claims about increased litigation and costs 
     are simply not true. In 1995 managed care reform opponents 
     called the patient protection act a billion-dollar health 
     care tax, and 1997 they claimed health care costs would 
     skyrocket upwards of 30 percent. However, multiple 
     independent studies, including an actuarial analysis by 
     Milliman and Robertson, of Scott and White's HMO, show costs 
     have increased by about 34 cents per member per month.


                         2. Independent Review

       It is our understanding that HR 4250, the House GOP bill, 
     would weaken Texas' independent review provisions. 
     Apparently, HR 4250's independent review is not binding 
     compared to the Texas law that requires managed care 
     organizations to provide the care deemed appropriate by the 
     independent review organization. Once again, the Texas 
     Legislature's preference in this regard was overwhelmingly 
     stated in 1997.


                     3. Emergency Care/Gag Clauses

       We also are concerned that HR 4250 weakens current Texas 
     law regarding emergency care and gag clauses. As we 
     understand it, the bill waters down Texas' prudent lay person 
     by allowing a health plan to override the treatment decision 
     by the emergency department physician. The gag clause 
     provision does not protect health care providers from 
     retaliation when they act as advocates for their patients.
       We know that you are hearing many points of view on managed 
     care reform. Thank you for considering our comments on the 
     potential impact of federal legislation on Texas law. As the 
     legislation proceeds to conference committee, we will share 
     additional comments with you. In the meantime, please call on 
     us if we can be of assistance.
           Sincerely,
     David Sibley,
                                        Chairman, Senate Committee
                                          on Economic Development.
     John Smithee,
                                         Chairman, House Committee
                                                     on Insurance.

[[Page H6987]]

     
                                  ____
                                    Office of the Comptroller,

                                        Austin, TX, July 29, 1998.
     Hon. Gene Green,
     House of Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Gene: As State Comptroller, I am disturbed by the 
     special interests in Washington and their attempts to preempt 
     and weaken Texas' HMO patient protection laws.
       You will recall that last year a bi-partisan effort in the 
     Texas Legislature succeeded in passing the nation's toughest 
     patient protection laws, including a new statute holding HMOs 
     legally accountable for wrongfully delaying or denying 
     necessary medical are.
       Now it appears that House Speaker Newt Gingrich is trying 
     to help special interest groups in Washington preempt Texas 
     law and dilute our new patient protection laws.
       As this issue moves into conference committee, I urge you 
     to support quality patient care in Texas rather than federal 
     legislation that preempts Texas laws protecting HMO patient 
     care.
       I also urge you to guard against falling prey to the false 
     arguments against holding HMOs legally accountable for the 
     wrongful denial of necessary medical care. As State Senator 
     David Sibley emphasized in a recent opinion column (Dallas 
     Morning News, 7/25/98), Texas' new HMO liability law has not 
     flooded the courthouse with new lawsuits, but instead has 
     ``actually diverted lawsuits and saved patients' legal 
     costs'' (see enclosure). As the state's chief financial 
     officer, I affirm Senator Sibley's observation.
       The following questions should be asked by anyone 
     considering support for the HMO reform conference committee 
     report:
       1. Will federal legislation preempt Texas' current managed 
     care patient protection laws?
       2. Will federal legislation preempts Texas' HMO legal 
     accountability law?
       3. Is there a federal floor that states may improve upon, 
     or will new federal legislation create a ceiling and preempt 
     Texas' tougher patient protection laws?
       For example, will the federal legislation erase Texas' gag 
     clause legislation, as well as gag clause legislation in many 
     other states, and substitute weaker provisions?
       4. Does the federal legislation preempt Texas' Ob/Gyn 
     Direct-Access Bill and substitute weaker language that only 
     permits direct access for ``routine'' care?
       5. Will the federal legislation be the final word on 
     managed care accountability, or will Texas and other states 
     experiment with different kinds of approaches such as their 
     own external review process?
       6. Because the Gingrich-supported HMO reform legislation is 
     silent on many more kinds of patient protections enacted in 
     Texas, are those projections also preempted or nullified by 
     this legislation? Will this proposal bill erase Texas laws 
     protecting patients and doctors from retaliation by a plan, 
     or due process provisions for health care providers, or 
     continuity-of-care guarantees after a provider has been 
     deselected?
       These only raise further questions about this proposed 
     federal legislation. I encourage you in the strongest 
     possible terms to defeat this bill on the grounds that it 
     seeks to take away Texas' HMO patient protection. As always, 
     if I can provide further information and help in any way, 
     please do not hesitate to let me know.
           Sincerely,
                                                       John Sharp,
                                   Comptroller of Public Accounts.

  Mr. PALLONE. Mr. Speaker, I want to thank my colleague from Texas 
because he brought out a number of very important points, and when he 
mentioned the minimal cost, the 34 cents per month, I am always happy 
to mention the CBO saying that our Democratic plan would only be maybe 
as much as $2 a month.
  But I agree with the gentleman, I think it would even be less than 
that. And the reason there would be no additional cost is, essentially, 
these patient protections are things that make sense. They are common 
sense proposals. And if an insurance company knows, if an HMO knows 
that they have to provide these protections, they get involved in 
prevention and they do not let terrible things happen. They do not deny 
care that should be provided. So that avoids the extra cost that might 
come from a lawsuit or damages or whatever because an HMO is not doing 
what they are supposed to do.
  So I think what we are really talking about are basic common sense 
ideas and principles that can be easily provided for if the HMO is told 
that they have to do it, and that is why it really does not cost any 
more.
  The other thing I wanted to mention that the gentleman brought out 
was with regard to the preemption, which I think is so important. And, 
yes, the same thing would be true in my home State of New Jersey. We 
have very strong patient protections now on the books, similar to what 
the Democrats have proposed with our Patients' Bill of Rights. And it 
is quite clear when we look at the Republican bill that it would 
preempt many of those very strong provisions in New Jersey, just as in 
the State of Texas.
  The reason for all this is that, as we talked before, this bill was 
essentially drafted and put together by the Republican leadership in 1 
week because they wanted to have a response to the fact that so many 
people around the country are clamoring for managed care reform. There 
are so many loopholes, so many problems, so many exceptions in this 
bill. Whether because of poor drafting or intentionally because it is 
basically the insurance companies that are writing it, essentially we 
are taking a step backward. The Republican leadership would take us a 
step backward with this legislation.
  I know the gentleman mentioned a couple of things, and I wanted to 
use them as examples, the kinds of loopholes that we have. The 
gentleman talked about the gag rule, where doctors are told by an HMO 
that they cannot talk about procedures or other means of doing things 
that the HMO will not cover. That is the gag rule, as we talk about it.
  Well, because of the complaints that the Democrats made, there were 
some changes made in the Republican bill so that there were some gag 
rule protections or some prohibitions on the gag rule. But when we 
looked at the fine print, we found that it only applied to doctors who 
were directly contracting with the HMO. But many physicians operate 
through group practices and they are not covered by it, so they still 
can impose a gag rule on those physicians.
  The gentleman mentioned the emergency room care. Well, again, that 
prudent layperson standard that we have in the Democratic bill says if 
I get severe chest pains and there is a hospital a mile away, I go to 
that hospital. I do not call for approval, and I do not go to the 
hospital 50 miles away that the HMO may say I am supposed to go to. 
Because the average person, prudent layperson, would not go 50 miles 
and call to get approval to go to a hospital when they have chest 
pains.
  Well, the Republican bill says the HMO can define medical necessity. 
So they could basically define a prudent layperson any way they want. 
And one of the things in the Democratic bill is that that includes 
severe pain. So if I have severe pain, I go to the local emergency 
room. But the Republicans do not provide for that, so they can define 
emergency care as not allowing for severe pain. Just an example.
  I do not want to keep mentioning all these examples, but it is just 
riddled with all these loopholes. And it is not really funny, I should 
not be laughing, but it is pretty sad because, in many cases, what it 
does is to preempt many good State laws and substitute very vague 
language that really does not provide any protection.
  I am glad that the gentleman brought that out this evening because I 
think it is very important. I appreciate it.
  Mr. GREEN. Again, I would like to thank the gentleman for this 
special order, and I do not think it is too strong a language to say 
that this bill that we passed, H.R. 4250, will not only not provide 
improvements, but it will set us back in patient responsibility, 
patient ability to be able to control their own destiny, physicians and 
providers being able to treat their patients, and that is what is so 
bad. I would hope that the American people will see what is happening, 
and I think they will after not only special orders like these, but 
also when we are back in our own districts.
  I have town meet hall meetings in August and I expect to explain to 
my constituents on how it works and what happened and how it is such a 
travesty that the State of Texas passed a law in 1997, it was actually 
passed in 1995, but it was vetoed by the governor then, and in 1997 it 
became law without his signature, and yet we are taking away that local 
legislature's ability to solve their problems locally.
  Again, 34 cents. Let me talk about the GAO report that talked about 
$2. I know that was an amount I used in the example for the price of a 
Big Mac, maybe a Supersized Big Mac now, that we could get these 
protections. Yet in Texas it is 34 cents. Thirty-four cents a month. So 
we are going to see cost estimates all over the board because it is 
hard to decide it. But, actually, in the State of Texas, the 
protections have been in effect and it costs 34 cents.
  Mr. PALLONE. The amazing thing that my colleague brings out about the

[[Page H6988]]

preemption is usually, for most protections or legislation that is of a 
protective nature for health or safety on a Federal level, the Federal 
law reads that if the State wants to be more protective of the health 
or the safety or the environment, or whatever it happens to be, that 
they can do so. It is amazing that this bill does the opposite.
  This Republican bill says that if we are more protective of the 
patient's health, then we are going to preempt that and the Federal law 
is going to hold. Usually we do the opposite, as the gentleman knows. 
So, again, there is clearly an effort here to do what the insurance 
companies want rather than do what not only is right, the right thing 
for the average person, but also what the norm is here when we deal 
with health and safety and environmental and other protections of that 
nature. So we know there is sort of a cynical side to this Republican 
bill in terms of what they are trying do.
  The gentleman mentioned another thing that I think is important, and 
I have talked all evening about the Patients' Bill of Rights being a 
Democratic bill. But the fact of the matter is there are Republicans 
who not only cosponsored the bill but voted for the bill on the floor 
of the House and voted against the Republican bill. What the Republican 
bill is is a Republican leadership bill. There are Republicans who 
would join us in a bipartisan fashion, which is another indication of 
why the Patients' Bill of Rights really is a good bill. It is 
bipartisan. But, unfortunately, the Republican leadership is opposed to 
it.

  I want to thank the gentleman again.

                          ____________________