[Congressional Record (Bound Edition), Volume 145 (1999), Part 7]
[House]
[Pages 9167-9171]
[From the U.S. Government Publishing Office, www.gpo.gov]



                             ON HEALTH CARE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Iowa (Mr. Ganske) is recognized for 
60 minutes as the designee of the majority leader.
  Mr. GANSKE. Mr. Speaker, I have taken to the well of this Chamber 
many times to talk about the need to enact meaningful patient 
protection legislation. Unfortunately, there remains a compelling need 
for Federal action, and I am far from alone in holding that view.
  Last week, for example, Paul Elwood gave a speech at Harvard 
University on health care quality. Elwood isn't exactly a household 
name, but he is considered the father of the HMO movement.
  Elwood told a startled group that he did not think health care 
quality would improve without government-imposed protections. Market 
forces, he told the group, ``will never work to improve quality, nor 
will voluntary efforts by doctors and health plans.''
  Mr. Elwood went on to say, and I quote, ``It doesn't make any 
difference how powerful you are or how much you know. Patients get 
atrocious care and can do very little about it. I've increasingly felt 
we've got to shift the power to the patient. I'm mad, in part because 
I've learned that terrible care can happen to anyone.''
  This is a quote by Paul Elwood, the father of the American HMO 
movement. Mr. Speaker, this is not the commentary of a mother whose 
child was injured by her HMO's refusal to authorize care. It is not the 
statement of a doctor who could not get requested treatment for a 
patient. Mr. Speaker, these words suggesting that consumers need real 
patient protection legislation to protect them from HMO abuses come 
from the father of managed care.
  Mr. Speaker, I am tempted to stop here and to let Dr. Elwood's speaks 
for themselves, but I think it is important to give my colleagues an 
understanding of the flaws in the health care market that led Dr. 
Elwood to reach his conclusion.
  Cases involving patients who lose their limbs or even their lives are 
not isolated examples. They are not anecdotes.
  In the past, I have spoken on this floor about little Jimmy Adams, a 
6-month-old infant who lost both hands and both feet when his mother's 
health plan made them drive many miles to go to an authorized emergency 
room rather than stopping at the emergency room which was closest.
  The May 4 USA Today contains an excellent editorial on that subject. 
It is entitled, Patients Face Big Bills as Insurers Deny Emergency 
Claims.
  After citing a similar case involving a Seattle woman, USA Today made 
some telling observations:
  ``Patients facing emergencies might feel they have to choose between 
putting their health at risk and paying a huge bill they may not be 
able to afford.''
  Or, ``All patients are put at risk if hospitals facing uncertainty 
about payment are forced to cut back on medical care.''
  This is hardly an isolated problem. The Medicare Rights Center in New 
York reported that 10 percent of complaints about Medicare HMOs related 
to denials for emergency room bills.
  The editorial noted that about half the States have enacted a 
``prudent layperson'' definition for emergency care this decade, and 
Congress has passed such legislation for Medicare and Medicaid.
  Nevertheless, the USA Today editorial concludes that this patchwork 
of laws would be much strengthened by passage of a national prudent 
layperson standard.
  The final sentence of the editorial reads, ``Patients in distress 
should not have to worry about getting socked with big health bills by 
firms looking only at their bottom line.''
  Mr. Speaker, I include the full text of the editorial in the Record 
at this point.

                            [From USA Today]

 Today's Debate: Paying for Emergency Care--Patients Face Big Bills as 
                     Insurers Deny Emergency Claims

  Our View--Industry Promises to Fix the Problem Fail, Investigations 
                                 Begin

       Early last year, a Seattle woman began suffering chest 
     pains and numbness while driving. The pain was so severe that 
     she pulled into a fire station seeking help, only to be 
     whisked to the nearest hospital, where she was promptly 
     admitted.
       To most that would seem a prudent course of action. Not to 
     her health plan. It denied payment because she didn't call 
     the plan first to get ``pre-authorized,'' according to an 
     investigation by the Washington state insurance commissioner.
       The incident is typical of the innumerable bureaucratic 
     hassles patients confront as HMOs and other managed care 
     companies attempt to control costs. But denial of payment for 
     emergency care presents a particularly dangerous double 
     whammy:
       Patients facing emergencies might feel they have to choose 
     between putting their health at risk and paying a huge bill 
     they may not be able to afford.
       All patients are put at risk if hospitals, facing 
     uncertainty about payment, are forced to cut back on medical 
     care.
       Confronted with similar outrages a few years ago, the 
     industry promised to clean up its act voluntarily, and it 
     does by and large pay up for emergency care more readily than 
     it did a few years ago. In Pennsylvania, for instance, 
     denials dropped to 18.6% last year from 22% in 1996.
       That's progress, but not nearly enough. Several state 
     insurance commissioners have been hit with complaints about 
     health plans trying to weasel out of paying for emergency 
     room visits that most people would agree are reasonable--even 
     states that mandate such payments. Examples:
       Washington's insurance commissioner sampled claims in early 
     1998 and concluded in an April report that four top insurers 
     blatantly violated its law requiring plans to pay for ER 
     care. Two-thirds of the denials by the biggest carrier in the 
     state--Regence BlueShield--were illegal, the state charged, 
     as were the majority of three other plans' denials. The plans 
     say those figures are grossly inflated.
       The Maryland Insurance Administration is looking into 
     complaints that large portions of denials in the state are 
     illegal. In a case reported to the state, an insurance 
     company denied payment for a 67-year-old woman complaining of 
     chest pain and breathing problems because it was ``not an 
     emergency.''
       Florida recently began an extensive audit of the state's 35 
     HMOs after getting thousands of complaints, almost all 
     involving denials or delays in paying claims, including those 
     for emergency treatments.
       A report from the New York-based Medicare Rights Center 
     released last fall found that almost 10% of those who called 
     the center's hotline complained of HMO denials for emergency 
     room bills.
       ER doctors in California complain the Medicaid-sponsored 
     health plans routinely fail to pay for ER care, despite state 
     and federal requirement to do so. Other states have received 
     similar reports, and the California state Senate is 
     considering a measure to toughen rules against this practice.
       The industry has good reason to keep a close eye on 
     emergency room use. Too many patients use the ER for basic 
     health care when a much cheaper doctor's visit would suffice.

[[Page 9168]]

       But what's needed to address that is better patient 
     education about when ER visits are justified and better 
     access to primary care for those who've long had no choice 
     other than the ER, not egregious denials for people with a 
     good reason to seek emergency care.
       Since the early 1990s, more than two dozen states have 
     tried to staunch that practice with ``prudent laypersons'' 
     rules. The idea is that if a person has reason to think his 
     condition requires immediate medical attention, health plans 
     in the state are required to pay for the emergency care. 
     Those same rules now apply for health plans contracting with 
     Medicare and Medicaid.
       A national prudent layperson law covering all health plans 
     would help fill in the gaps left by this patchwork of state 
     and federal rules.
       At the very least, however, the industry should live up to 
     its own advertised standards on payments for emergency care. 
     patients in distress should not have to worry about getting 
     socked with big health bills by firms looking only at their 
     own bottom line.

  Mr. Speaker, there are few people in this country who have not 
personally had a difficult time getting health care from an HMO. 
Whether we are talking about extreme cases like James Adams or the 
routine difficulties obtaining care that seem all too common, the 
public is getting frustrated by managed care. The HMO industry has 
earned a reputation with the public that is so bad that only tobacco 
companies are held in lower esteem.
  Let me cite a few statistics to back this up. Mr. Speaker, by more 
than two to one, Americans support more government regulation of HMOs. 
Last month, the Harris Poll revealed that only 34 percent of Americans 
think that managed care companies do a good job of serving their 
customers. That is down sharply from the 45 percent who thought so just 
a year ago.
  Maybe more amazing were the results when Americans were asked whether 
they trusted a company to do the right thing if they had a serious 
problem. By nearly a two to one margin, Americans would not trust HMOs 
in such a situation. That level of confidence was far behind other 
industries, such as hospitals, airlines, banks, automobile 
manufacturers and pharmaceutical companies. In fact, the only industry 
to fare worse in the survey than HMOs were tobacco companies.
  Anyone who still needs proof that managed care reform is popular with 
the public just needs to go to the movie, As Good As It Gets. Audiences 
clapped and cheered when during the movie Academy Award winner Helen 
Hunt expressed an expletive about the lack of care her asthmatic son 
was getting from their HMO. No doubt the audience's reaction was fueled 
by dozens of articles and news stories highly critical of managed care 
and also by real-life experiences.

                              {time}  1545

  In September 1997 the Des Moines Register ran an op-ed piece 
entitled, ``The Chilly Bedside Manner of HMOs,'' by Robert Reno, a 
Newsweek writer.
  The New York Post ran a week-long series on managed care. The 
headlines included ``HMO's Cruel Rules Leave Her Dying for the Doc She 
Needs.''
  Another headline blared out: ``Ex New Yorker Is Told: Get Castrated 
So We Can Save Dollars.''
  Or how about this headline? ``What His Parents Didn't Know About HMOs 
May Have Killed This Baby.''
  Or how about the 29-year-old cancer patient whose HMO would not pay 
for his treatments? Instead the HMO case manager told him to have a 
fund-raiser. A fund-raiser. Mr. Speaker, I certainly hope that campaign 
finance reform will not stymie this man's attempts to get his cancer 
treatment.
  To counteract this, this image in the public, even some health plans 
have taken to bashing their colleagues. Here in Washington one ad 
declared, ``We don't put unreasonable restrictions on our doctors, we 
don't tell them they can't send you to a specialist.''
  In Chicago Blue Cross ads proclaimed, ``We want to be your health 
plan, not your doctor.''
  In Baltimore an ad for Preferred Health Network assured customers: 
``At your average health plan cost controls are regulated by 
administrators. At PHN doctors are responsible for controlling costs.''
  Mr. Speaker, advertisements like these demonstrate that even the HMOs 
know that there are more than a few rotten apples in the barrel.
  An example of this problem can be found in the recent 10th Circuit 
Court of Appeals decision in the case Jones v. Kodak. The name Jones is 
particularly appropriate because after this decision other health plans 
will rush to keep up with what their competitors are doing to the 
Joneses in this world. In Jones v. Kodak the 10th Circuit Court of 
Appeals showed how a clever health plan can use federal law to keep 
patients from getting needed medical care. The facts are relatively 
simple:
  Mrs. Jones received health care through her employer, Kodak. The plan 
covers inpatient substance abuse treatment when medically necessary. 
The determination as to whether a particular substance abuse service is 
medically necessary is made by American Psych Management, APM.
  Mr. Speaker, APM reviewed a request for inpatient substance abuse 
treatment and found that Mrs. Jones did not meet APM's protocol for 
inpatient mental health hospitalization. The family pursued the case 
further, eventually persuading the health plan to send the case to an 
independent medical expert for review. The reviewer agreed that Mrs. 
Jones did not qualify for the benefit under the criteria established by 
the plan. But the reviewer observed that, ``the criteria are too rigid 
and do not allow for individualization of case management.'' In other 
words, the criteria were not appropriate to Mrs. Jones' condition. His 
hands being tied, the reviewer was unable to reverse APM's original 
decision.
  So Mrs. Jones sued for the failure to pay the claim. The trial court 
affirmed the court's decision to grant summary judgment to the 
defendants. The 10th Circuit Court of Appeals held the following:
  ``The Employment Retirement Income Security Act's disclosure 
provisions do not require that the plan's summary contained 
particularized criteria for determining medical necessity.''
  The court went on.
  ``The unpublished APM criteria were part of the plan's terms. Because 
we consider the APM criteria a matter of planned design and structure 
rather than implementation, we agree that a court cannot review them.''
  Mr. Speaker, in layman's terms this means that a plan does not have 
to disclose the treatment guidelines or protocols it uses to determine 
whether or not a patient should get care. Moreover, any treatment 
guidelines used by the plan would be considered part of the plan design 
and thus are not reviewable by a court.
  The implications of this decision, Mr. Speaker, are in a word 
``breathtaking''. Jones v. Kodak provides a virtual road map to 
enterprising health plans on how to deny payment for medically 
necessary care. The decision is a clear indication of why we need 
Federal legislation to ensure that treatment decisions are based on 
good medical practice and take into consideration the individual 
patient's circumstances.
  Under Jones v. Kodak, health plans do not need to disclose to 
potential or even current enrollees the specific criteria they use to 
determine whether a patient will get treatment. There is no requirement 
that a health plan uses guidelines that are applicable or appropriate 
to a particular patient's care.
  Despite these limitations, Jones compels external reviewers to follow 
the plan's inappropriate treatment guidelines because to do otherwise 
would violate the sanctity of ERISA, and most important to the plan, 
the decision assures the HMOs that, if they are following their own 
criteria, then they are shielded from court review. It makes no 
difference how inappropriate or inflexible the criteria may be since, 
as the court in Jones noted, this is a plan design issue and, 
therefore, not reviewable under ERISA.
  Mr. Speaker, if Congress through patient protection legislation does 
not act to address this issue, many more patients are going to be left 
with no care and no recourse to get that care. Jones v. Kodak sets a 
chilling precedent making health plans and the treatment protocols 
untouchable. The case in effect encourages health plans to concoct 
rigid and potentially unreasonable criteria for determining when a

[[Page 9169]]

covered benefit is medically necessary. That way they can easily deny 
care and cut costs, all the while insulated from responsibility for the 
consequences of their actions.
  Let me give my colleagues an example. A plan could promise to cover 
cleft lip surgery for those born with that birth defect. But they could 
then put in undisclosed documents that the procedure is only medically 
necessary once the child reaches the age of 16. Or that coronary bypass 
operations are only medically appropriate for those who have previously 
survived two heart attacks.
  Mr. Speaker, you may think that sounds absurd, but that is the way 
the law reads. Logic and principles of good medical practice would 
dictate that that is not sound health care, but the Jones case affirms 
that health plans do not have to consider medicine at all. They can be 
content to consider only the bottom line.
  Unless Federal legislation addresses this issue, patients will never 
be able to find out what criteria their health plan uses to provide 
care, and external reviewers who are bound by current law will be 
unable to pierce those policies and reach independent decisions about 
the medical necessity of a proposed treatment using clinical standards 
of care, and Federal ERISA law will prevent courts from engaging in 
such inquiries also. The long and the short of the matter is that sick 
patients will find themselves without proper treatment and without 
recourse.
  Mr. Speaker, I have introduced legislation, H.R. 719, the Managed 
Care Reform Act, which addresses the very real problems in managed 
care. It gives patients meaningful protections. It creates a strong and 
independent external review process, and it removes the shield of ERISA 
which health plans have used to prevent State court negligence actions 
by enrollees who have been injured as a result of that plan's 
negligence.
  This bill has received a great deal of support and has been endorsed 
by consumer groups like the Center For Patient Advocacy, the American 
Cancer Society, the National MS Society. It is also supported by many 
health care provider groups such as the American Academy of Family 
Physicians whose professionals are on the front lines and have seen how 
faceless HMO bureaucrats thousands of miles away, bureaucrats who have 
never seen the patient, can deny needed medical care because it does 
not fit their, quote, criteria unquote.
  Mr. Speaker, I would like to focus on one small aspect of my bill, 
specifically the way in which it addresses the issue of the Employee 
Retirement Income Security Act, ERISA. It is alarming to me that ERISA 
combines a lack of effective regulation of health plans with a shield 
for health plans that largely gives them immunity from liability for 
their negligent decisions.
  Personal responsibility has been a watch word for this Republican 
Congress, and this issue should be no different. Health plans that 
recklessly deny needed medical service should be made to answer for 
their conduct. Laws that shield entities from their responsibility only 
encourage them to cut corners. Congress created the ERISA loophole and 
Congress should fix it.
  Mr. Speaker, my bill has a compromise on the issue of health plan 
liability. I continue to believe that health plans that make negligent 
medical decisions should be accountable for those decisions, but 
winning a lawsuit is little consolation to a family that has lost a 
loved one. The best HMO bill assures that health care is delivered when 
it is needed, and I also believe that the liability should attach to 
the entity that is making those medical decisions. Many self insured 
companies contract with large managed care plans to deliver care. If 
the business is not making those discretionary decisions, under my bill 
they would not face liability. But if they cross the line and they 
determine whether a particular treatment is medically necessary in a 
given case, then they are making medical decisions and they should be 
held responsible for their actions.
  Now, Mr. Speaker, to encourage health plans to give patients the 
right care without having to go to court my bill provides for both an 
internal and an external appeals process that is binding on the plan, 
and an external review could be requested by either the patient or the 
health plan. I can see circumstances where a patient is requesting an 
obviously inappropriate treatment; let us say laetrile, and the plan 
would want to send the case to external review. The external review 
would back up their denial. It would give them, in effect, a defense if 
they are ever dragged into court.
  When I was discussing this idea with the President of Wellmark Iowa 
Blue Cross/Blue Shield, he expressed support for the strong external 
review. In fact, he told me that his company is instituting most of the 
recommendations of the President's Commission on Health Care Quality 
and that he did not foresee any premium increases as a result. Mostly 
what it meant, he told me, was tightening existing safeguards and 
policies already in place.
  Now, Mr. Speaker, this chief executive also told me that he could 
support a strong, independent, external review system like the one in 
my bill, but he cautioned: If we did not make the decision and are just 
following the recommendations of the review panel, then we should not 
be liable for punitive damages, and I agree with that. Punitive damages 
awards are to punish outrageous and malicious conduct. If a health plan 
follows a recommendation of an independent review board composed of 
medical experts, it is tough to figure out how they acted with malice. 
So my bill provides health plans with a complete shield from punitive 
damages if they follow the recommendation of that external review 
panel, and that I think is a fair compromise on this issue of health 
plan liability.
  And I certainly suspect that Aetna wishes that they had had an 
independent peer panel available even with a binding decision on care 
when it denied care to David Goodrich. Earlier this year a California 
jury handed down a verdict of $116 million in punitive damages to his 
widow, Teresa Goodrich. If Aetna or the Goodriches had had ability to 
send the denial of care to external review, they could have avoided the 
courtroom. But more importantly, David Goodrich might still be alive 
today.
  Mr. Speaker, that is why my plan should be attractive to both sides. 
Consumers get a reliable and quick external appeals process which will 
help them get the care they need. But if the plan fails to follow the 
external reviewer's decision, the patient can sue for punitive damages, 
and health insurers whose greatest fear is that 50 or $100 million 
punitive damage award can shield themselves from those astronomical 
awards but only if they follow the recommendations of an independent 
review panel which is free to reach its own decision about what care is 
medically necessary.

                              {time}  1600

  The HMOs say that my legislation and other patient protection 
legislation would cause premiums to skyrocket. There is ample evidence, 
however, that that would not be the case.
  Last year, the Congressional Budget Office estimated that a similar 
proposal, which did not include the punitive damages relief, would 
increase premiums around 4 percent over 10 years.
  When Texas passed its own liability law 2 years ago, the Scott and 
White Health Plan estimated that premiums would have to increase just 
34 cents per member per month to cover the costs. These are hardly 
alarming figures.
  The low estimate by Scott and White seems accurate since only one 
suit has been filed against the Texas health plan since Texas passed 
patient protection legislation removing the liability shield. That is 
far from the flood of litigation that opponents predicted.
  I have been encouraged by the positive response my bill has received, 
and I think that this could be the basis for a bipartisan bill this 
year. In fact, the Hartford Courant, a paper located in the heart of 
insurance country, ran a very supportive editorial on my bill by John 
MacDonald. Speaking of the punitive damages provision, MacDonald called 
it a reasonable compromise and

[[Page 9170]]

urged insurance companies to embrace the proposal as, quote, the best 
deal they may see in a long time, unquote.
  Mr. Speaker, I include the full text of the editorial by John 
MacDonald in the Record at this point.

              [From the Hartford Courant, March 27, 1999]

                A Common-Sense Compromise On Health Care

                          (By John MacDonald)

       U.S. Rep. Greg Ganske is a common-sense lawmaker who 
     believes patients should have more rights in dealing with 
     their health plans. He has credibility because he is a doctor 
     who has seen the runaround patients sometimes experience when 
     they need care. And he's an Iowa Republican, not someone 
     likely to throw in with Congress' liberal left wing
       For all those reasons, Ganske deserves to be heard when he 
     says he has found a way to give patients more rights without 
     exposing health plans to a flood of lawsuits that would drive 
     up costs.
       Gankse's proposal is included in a patients' bill of rights 
     he has introduced in the House. Like several other bills 
     awaiting action on Capitol Hill, Ganske's legislation would 
     set up a review panel outside each health plan where patients 
     could appeal if they were denied care. Patients could also 
     take their appeals to court if they did not agree with the 
     review panel.
       But Ganske added a key provision designated to appeal to 
     those concerned about an explosion of lawsuits. If a health 
     plan followed the review panel's recommendation, it would be 
     immune from punitive damage awards in disputes over a denial 
     of care. The health plan also could appeal to the review 
     panel if it thought a doctor was insisting on an untested or 
     exotic treatment. Again, health plans that followed the 
     review panel's decision would be shielded from punitive 
     damage awards.
       This seems like a reasonable compromise. Patients would 
     have the protection of an independent third-party review and 
     would maintain their right to go to court if that became 
     necessary. Health plans that followed well-established 
     standards of care--and they all insist they do--would be 
     protected from cases such as the one that recently resulted 
     in a $120.5 million verdict against an Aetna plan in 
     California. Ganske, incidentally, calls that award 
     ``outrageous.''
       What is also outrageous is the reaction of the Health 
     Benefits Coalition, a group of business organizations and 
     health insurers that is lobbying against patients' rights in 
     Congress. No sooner had Ganske put out this thoughtful 
     proposal than the coalition issued a press release with the 
     headline: Ganske Managed Care Reform Act--A Kennedy-Dingell 
     Clone?
       The headline referred to Sen. Edward M. Kennedy, D-Mass., 
     and Rep. John D. Dingell, D-Mich., authors of a much tougher 
     patients' rights proposal that contains no punitive damage 
     protection for health plans.
       The press release said: ``Ganske describes his new bill as 
     an affordable, common sense approach to health care. In fact, 
     it is neither: It increases health care costs at a time when 
     families and businesses are facing the biggest hike in health 
     care costs in seven years.''
       There is no support in the press release for the claim of 
     higher costs. What's more, the charge is undercut by a press 
     release from the Business Roundtable, a key coalition member, 
     that reveals that the Congressional Budget Office has not 
     estimated the cost of Ganske's proposal. The budget office is 
     the independent reviewer in disputes over the impact of 
     legislative proposals.
       So what's going on? Take a look at the coalition's record. 
     Earlier this year, it said it was disappointed when Rep. 
     Michael Bilirakis, R-Fla., introduced a modest patients' 
     rights proposal. It said Sen. John H. Chafee, R-R.I., and 
     several co-sponsors had introduced a ``far left'' proposal 
     that contains many extreme measures. John Chafee, leftist? 
     And, of course, it thinks the Kennedy-Dingell bill would be 
     the end of health care as we know it.
       The coalition is right to be concerned about costs. But the 
     persistent No-No-No chorus coming from the group indicates it 
     wants to pretend there is no problem when doctor-legislators 
     and others know better.
        This week, Ganske received an endorsement for his bill 
     from the 88,000-member American Academy of Family Physicians. 
     ``These are the doctors who have the most contact with 
     managed care,'' Ganske said. ``They know intimately what 
     needs to be done and what should not be done in 
     legislation.''
       Coalition members ought to take a second look. Ganske's 
     proposal may be the best deal they see in a long time.

  Mr. Speaker, it is also important to state what this bill does not do 
to ERISA plans. It does not eliminate the Employment Retirement Income 
Security Act or otherwise force large multistate health plans to meet 
benefit mandates of each and every of the 50 States. This is an 
exceedingly important point.
  Just 2 weeks ago, representatives of a major employer from the upper 
Midwest were in my office. They urged me to rethink my legislation 
because they alleged it would force them to comply with benefit 
mandates of each State and that the resulting rise in costs would force 
them to discontinue offering health insurance to employees.
  Frankly, Mr. Speaker, I was stunned by their comments, because their 
fears are totally unfounded. It is true that my bill would lower the 
shield of ERISA and allow plans to be held responsible for their 
negligence, but it would not alter the ability of group health plans to 
design their own benefits package.
  Let me be absolutely clear on this point. The ERISA amendments in my 
bill would allow States to pass laws to hold health plans accountable 
for their actions. It would not allow States to subject ERISA plans to 
a variety of State benefit mandates.
  Mr. Speaker, there are other pressing issues that require our prompt 
attention. In particular, the crisis in the Balkans is becoming a 
humanitarian tragedy of unspeakable proportions. No matter what else 
Congress does, we have to stand ready to help the displaced Kosovars 
with food, clothing and shelter.
  Regardless of how the crisis in the Balkans evolves, it would be 
irresponsible for Congress to ignore domestic policy issues. The need 
for meaningful patient protection legislation continues to fester.
  Before closing, Mr. Speaker, I also want to address something that 
should not be in patient protection legislation, and I am speaking 
specifically of extraneous provisions that could bog down the bill and 
severely weaken its chances for passage and for being signed into law.
  In particular, there have been reports in the press and elsewhere 
that the managed care reform legislation will at some point be married 
with a bill to increase access to health insurance. Let me be perfectly 
clear on this. I strongly believe that Congress should consider ways to 
make health insurance more affordable. It would be a tremendous 
mistake, however, in my opinion, to try to marry these two ideas 
together. It would present too many opportunities for needed patient 
protections to become sidetracked in fights over tax policy and the 
future of the employer-based health system.
  There are many reforms to improve access to health care that I 
support. I have long advocated medical savings accounts. In fact, Mr. 
Speaker, I wrote a white paper about their potential benefits in 1995 
and was pleased to see them created first for small businesses and the 
uninsured and then 2 years ago for Medicare recipients.
  I also support changing the law so individuals receive the same tax 
treatment as large businesses when buying health insurance. It makes no 
sense to me why a big business and its employees can deduct the cost of 
health benefits but an employee of a small company that does not offer 
health insurance must pay all of the cost with after-tax dollars.
  Finding the money to provide this tax equity is not going to be easy.
  I believe that ideas like association health plans, also known as 
multiple employer welfare associations, MEWAs, and healthmarts could 
destroy the individual market by leaving it with a risk pool that is 
sicker and more expensive.
  Let me give some specific concerns about association health plans or 
multiple employer welfare associations. Simply put, an association 
health plan is a pool of individuals who are employers who band 
together and form a group that self-insures. By doing so, they remove 
themselves from regulation by State insurance commissioners and instead 
subject themselves to regulation by Federal ERISA law.
  While association health plans may provide a measure of efficiency 
for employers, they leave employees without any real safeguards against 
the less honorable practices of HMOs. In a very real sense, ERISA 
remains the Wild West of health care. Unlike State laws which regulate 
quality, ERISA contains only minimal safeguards for quality. Let me 
explain.
  ERISA places only limited requirements on health plans. They must act

[[Page 9171]]

as fiduciaries, meaning they must exercise sound management consistent 
with rules established by a plan sponsor. They must provide written 
notice to beneficiaries whose claims have been denied, setting forth 
the reasons. They must disclose some information about the plan to 
participants of beneficiaries. They cannot discriminate against 
beneficiaries. They have to allow certain employees, usually those who 
have been terminated, to purchase COBRA coverage. They have to provide 
coverage to adopted children in the same manner they cover natural 
children, and they have to comply with the 1996 HIPAA law in regards to 
portability.
  That sounds all right, but consider what ERISA does not require. 
Among its many requirement shortcomings, ERISA does not impose any 
quality assurance standards or other standards for utilization review. 
ERISA does not allow consumers to recover compensatory or punitive 
damages if a court finds against the health plan in a claims dispute. 
ERISA does not prevent health plans from changing, reducing or 
terminating benefits; and with few exceptions ERISA does not regulate 
the design or content such as covered services or cost sharing of a 
plan. Remember from the Jones case how important that can be. And ERISA 
does not specify any requirements for maintaining plan solvency.
  I confess, I cannot understand why some Members would want to place 
more employees in health plans regulated by ERISA. If anything, we 
should be moving in the opposite direction and returning regulatory 
authority to State insurance commissioners.
  The patient protection legislation is intended to fix some very real 
problems in ERISA. I will not consider adding to the number of people 
under its regulatory umbrella until I see meaningful patient 
protections for them signed into law.
  I am certainly not alone in my concerns about association health 
plans. When they were proposed as part of the Republican patient 
protection bill last year, they drew significant opposition from Blue 
Cross/Blue Shield plans and the National Association of Insurance 
Commissioners.
  Blue Cross, the insurer of last resort for many States, fears that 
association health plans will undermine State programs to keep 
insurance affordable. Joined by the Health Insurance Association of 
America, they wrote, ``Association health plans would undermine the 
most volatile segments of the insurance market, the individual and 
small group markets. The combinations of these with healthmarts could 
lead to massive market segmentation and regulatory confusion.''
  A constituent of mine and an insurance industry professional wrote to 
me to express his concerns about association health plans. He wondered 
why these plans ``can sell whatever level of benefits they want to 
provide and can limit coverage for any type of benefit the plan might 
want to cover.''
  Now, some may say that these concerns reflect the self-interest of 
the industry. Before buying into that argument, consider an editorial 
by The Washington Post a year ago. In criticizing association health 
plans, and I would say, by extension, healthmarts, the Post pointed out 
that, ``if you free the MEWAs, multiple employer welfare associations, 
you create a further split in the insurance market which likely will 
end up helping mainly healthy people at the expense of the sick.''
  Some may say that The Washington Post is a relentlessly liberal paper 
and that it cannot be considered an objective source. Then consider 
what the American Academy of Actuaries had to say about association 
health plans. In a letter to Congress in June, 1997, they wrote, 
``While the intent of the bill is to promote association health plans 
as a mechanism for improving small employers' access to affordable 
health care, it may only succeed in doing so for employees with certain 
favorable risk characteristics. Furthermore, this bill contains 
features which may actually lead to higher insurance costs.''
  The Academy went on to explain how these plans could undermine State 
insurance regulation. ``The resulting segmentation of the small 
employer group market into higher and lower cost groups would be 
exactly the type of segmentation that many State reforms have been 
designed to avoid. In this way, exempting them from State mandates 
would defeat the public policy purposes intended by State 
legislatures.''
  The Academy also pointed out that these plans ``weaken the minimum 
solvency standards for small plans relative to the insured marketplace, 
which may increase the chance for bankruptcy of a health plan.''
  Still not convinced? Well, how about a letter jointly signed by the 
National Governors Association, the National Conference of State 
Legislatures and the National Association of Insurance Commissioners. 
In a letter to Congress, these groups argued that association health 
plans, and I might add healthmarts, ``substitute critical State 
oversight with inadequate Federal standards to protect consumers and to 
prevent health plan fraud and abuse.''
  Think these are just the concerns of Washington insiders? Legislators 
in my own State took time to write and express their concerns about 
association health plans. A letter signed by six members of the Iowa 
House of Representatives urged rejection of association health plans. 
They wrote, ``Under the guise of allowing employers to join large 
purchasing groups to lower health care costs, these proposals would 
result in large premium increases for small employers and individuals 
by unraveling State insurance reforms and fragmenting the market.''
  Mr. Speaker, attempting to attach association health plan legislation 
or healthmart legislation to patient protection legislation poses two 
very real dangers. First, association health plans undermine the 
individual insurance market and can leave consumers without meaningful 
protections from HMO abuses; and, second, I am very concerned that 
opposition to healthmarts and association health plans, much like that 
I have already cited today, will bog down patient protection 
legislation, leading it to suffer the same death that it did last year.
  Mr. Speaker, on behalf of patients like Jimmy Adams, who lost his 
hands and feet because an HMO would not let his parents take him to the 
nearest emergency room, I will fight efforts to derail managed care 
reform by adding these sorts of extraneous provisions; and I pledge to 
do whatever it takes to ensure that opponents of reform are not allowed 
to mingle these issues in order to prevent passage of meaningful 
patient protections.
  Mr. Speaker, I look forward to working with all my colleagues to see 
that passage of real HMO reform is an accomplishment of the 106th 
Congress, something we all, on both sides of the aisle, can be proud 
of.

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