[Congressional Record (Bound Edition), Volume 145 (1999), Part 7]
[House]
[Pages 9506-9511]
[From the U.S. Government Publishing Office, www.gpo.gov]



CONSUMERS NEED PATIENT PROTECTION LEGISLATION TO PROTECT THEM FROM HMO 
                                 ABUSES

  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. There is 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. Paul Elwood is not a household name, 
but he is considered the father of the HMO movement. Elwood told a 
surprised 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 effort 
by doctors and health plans.''
  Elwood went on to say, and I quote, ``It doesn't make any difference 
how powerful you are or how much you

[[Page 9507]]

know. Patients get atrocious care and can do very little about it. I 
have increasingly felt we've got to shift the power to the patient. I'm 
mad, in part because I have learned that terrible care can happen to 
anyone.''
  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 his patient. No, 
Mr. Speaker, those words, suggesting that consumers need real patient 
protection legislation to protect them from HMO abuses, come from the 
father of managed care.
  I am tempted to stop here and let Dr. Elwood's words speak 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 life are not isolated examples. Mr. Speaker, they 
are not mere anecdotes.
  In the past, I have spoken about James Adams, an infant who lost both 
his hands and both his feet when his mother's health plan made them 
drive past one emergency room after another in order to go to an 
authorized emergency room. Unfortunately, enroute, James suffered an 
arrest, and because of that arrest he lost both hands and feet because 
of the delay in treatment.
  On Monday, May 4, USA Today ran an excellent editorial on that 
subject. It was 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.''
  And this is hardly an isolated problem. The Medicare Rights Center in 
New York reported that 10 percent of complaints for Medicare HMOs 
related to denials for emergency room bills. The editorial noted that 
about half the States have enacted prudent layperson definitions for 
emergency care this decade, and Congress has passed such protection for 
Medicare and Medicaid recipients. Nevertheless, the USA Today editorial 
concludes that this patchwork of laws would be much strengthened by 
passage of a national prudent layperson standard that applies to all 
Americans.
  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 this editorial for the 
Record:

                     [From USA Today, May 4, 1999]

       Patients Face Big Bills as Insurers Deny Emergency Claims

       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 that 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 that Medicaid-sponsored 
     health plans routinely fail to pay for ER care, despite state 
     and federal requirements 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.
       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 layperson'' 
     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 had 
difficulty getting health care from their HMO. Whether we are talking 
about extreme cases like little Jimmy Adams or routine difficulties in 
obtaining care that seem all too common, the public is getting 
frustrated by managed care. In fact, 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. 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 managed care companies 
do a good job of serving their customers. That is down sharply from the 
45 percent who thought that 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 
safety problem. By nearly two to one 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 than the managed care industry on the trust issue was the 
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 during the movie when Academy Award 
winner Helen Hunt expressed an expletive about the lack of care her 
asthmatic son was getting from their HMO. No doubt the audiences' 
reactions were fueled by dozens of articles and news stories 
documenting the problems with managed care.
  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. Headlines 
included, ``HMO's Cruel Rules Leave Her

[[Page 9508]]

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 one? ``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 bureaucrat told him 
to hold a fundraiser. A fundraiser. Mr. Speaker, this is about patient 
protections, not about campaign finance reform.
  To counteract this, some health plans have even taken to bashing 
their own colleagues. Here in Washington one ad read: ``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. But at PHN, 
doctors are responsible for controlling costs.''
  Advertisements like these demonstrate that even the HMOs know that 
there are more than a few rotten apples at the bottom of that barrel.

                              {time}  1630

  In trying to stave off Federal legislation to improve health care 
quality, many HMOs have insisted that the free market will help cure 
whatever ails managed care.
  And I am a firm believer in the free market, but the health care 
market is anything but a free market. Free markets generally are not 
dominated by third parties providing first-dollar coverage. Free 
markets generally do not reward companies who give consumers less of 
what they want. And free markets usually do not feature limited 
competition either geographically or because an employer offers them 
only one choice, take it or leave it.
  The Washington Business Group on Health recently released its fourth 
annual survey report on purchasing value in health care. Here are a few 
examples of how the market is working: ``To improve health care, 51 
percent of employers,'' this is employers, ``51 percent of employers 
believe cost pressures are hurting quality. In evaluating and selecting 
health plans, 89 percent of employers consider cost. Less than half 
consider accreditation status. And only 39 percent consider consumer 
satisfaction reports.
  ``Employees are given limited information about their health plans. 
Only 23 percent of companies tell employees about appeals and grievance 
processes. And in the last 3 years, the percentage of businesses giving 
employees consumer satisfaction results has dropped from 37 percent to 
15 percent. Over half of employers offer employees an incentive to 
select plans with lower costs. Only about 15 percent offer financial 
incentives to choose a plan with higher quality.''
  Mr. Speaker, the recent Court of Appeals decision in the case ``Jones 
v. Kodak'' demonstrates just how dangerous the ``free market'' is to 
health plan patients.
  Mrs. Jones received health care through her employer, Kodak. The plan 
denied her request for in-patient substance abuse treatment, finding 
that she did not meet their protocol standards. The family took the 
case to an external reviewer who agreed that Mrs. Jones did not qualify 
for the benefit under the criteria established by the plan. But that 
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 for Mrs. Jones's condition.
  So, in denying Mrs. Jones's claim, the 10th Circuit Court of Appeals 
held that ERISA, the Employment Retirement Income Security Act, does 
not require plans to state the criteria used to determine whether a 
service is medically necessary. On top of that, the court ruled that 
unpublished criteria are a matter of plan design and structure rather 
than implementation and, therefore, not reviewable by the judiciary.
  Well, Mr. Speaker, the implications of this decision are 
breathtaking. ``Jones v. Kodak'' provides a virtual road map to 
enterprising health plans on how to deny payment for medically 
necessary care. 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 use guidelines that are applicable or 
appropriate to a particular patient's case.
  And most important to the plans, the decision assures HMOs that if 
they follow their own criteria, then they are shielded from court 
review. It makes no difference how inappropriate or inflexible those 
criteria can be since, as the court in ``Jones'' noted, this is a plan 
design issue and, therefore, not reviewable under ERISA.
  Well, if Congress, through patient protection legislation, does not 
address this issue, many more patients will 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.
  For example, a plan could promise to cover cleft lip surgery for 
those born with this birth defect but they could put, under ``Jones,'' 
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.
  Logic and principles of good medical practice would dictate that is 
not sound health care. But the ``Jones'' case affirms that health plans 
do not have to consider good health care, all they have to look at is 
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 find out what those policies are and to reach independent decisions 
about the medical necessity of a proposed treatment using generally 
accepted principles of standards of care. And the Federal ERISA law 
will prevent courts from engaging in those inquiries, too.
  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 ERISA shield 
which health plans have used to prevent State court negligence actions 
by enrollees who are injured as a result of the 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 Association of Children's Hospitals, the 
National Multiple Sclerosis Society.
  It has also been supported by many health care groups, such as the 
American Academy of Family Physicians, whose members are on the front 
lines and who see how faceless HMO bureaucrats thousands of miles away, 
bureaucrats who have never even seen the patient, deny needed medical 
care because it does not fit their criteria.
  I would like to focus on one small aspect of my bill, especially the 
way in which it addresses the issue of the Employment 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 
actions.
  Mr. Speaker, personal responsibility has been a watchword 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.
  My bill has a compromise on the issue of health plan liability. I 
continue to believe that health plans that make negligent medical 
decisions

[[Page 9509]]

should be accountable for their actions. But winning a lawsuit is 
little consolation to a family that has lost a loved one. The best HMO 
bill ensures that health care is delivered when it is needed. And I 
also believe that the liability should attach to the entity that is 
making that medical decision.
  Many self-insured companies contract with large managed care plans to 
deliver care. If the business is not making those discretionary 
decisions, then in my bill, they would not face liability. But if they 
cross that line and determine whether a particular treatment is 
medically necessary in a given case, then they are making medical 
decisions and they should be held accountable for their actions.
  However, 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.
  Mr. Speaker, that is where it varies with what passed this House last 
year. Sure, there was an external appeals process in last year's bill, 
but it was not binding on the plan. An external review could be 
requested in my bill by either the patient or by the health plan.
  I can see some circumstances where a patient is requesting an 
obviously inappropriate treatment, like laetrile for cancer, and the 
plan would want to take that case to an external review. That would 
back up their decision and it would give them an effective defense if 
they were ever dragged into court to defend that decision.
  So 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.
  This CEO also told me that he could support a strong independent 
external review system like the one in my bill. But he said, if we do 
not make that decision and we are just following the recommendation of 
that external review panel, then we should not be liable for punitive 
damages. And I agree with that.
  Punitive damage awards are meant to punish outrageous and malicious 
behavior. If a health plan follows the recommendation of an independent 
review board composed of medical experts, it is tough to figure out how 
that health plan has acted with malice.
  So my bill provides health plans with a complete shield from punitive 
damages if they promptly follow the recommendations of that external 
review panel. And that I think is a fair compromise to the issue of 
health plan liability.
  I certainly suspect that Aetna wishes 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 the ability to send 
the denial of care to an external review, they could have avoided the 
courtroom, but more importantly, David Goodrich probably would have 
received the care that he needed and he might still be alive today.
  And that is why my plan should be attractive to both sides. Consumers 
get a reliable and quick external appeals process which helps 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 million or $100 
million punitive damages 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.
  Now, the HMOs say that patient protection legislation will cause 
premiums to skyrocket. There is ample evidence, however, that that is 
not the case.
  Last year, the Congressional Budget Office estimated that a similar 
proposal, which did not include the punitive damages relief that is in 
my bill, would have increased premiums around 4 percent cumulative over 
10 years. And when Texas passed its own liability law 2 years ago, the 
Scott and White health plan estimate, that premiums would have to 
increase just 34 cents per member per month to cover the costs.
  Now, Mr. Speaker, those are hardly alarming figures. And the low 
estimate by Scott and White seems accurate since only one suit has been 
filed against a Texas health plan since that law was passed. That is 
far from the flood of litigation that the opponents to that legislation 
predicted. I have been encouraged by the positive response my bill has 
received, and I think that this is the basis for what could be 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.

                              {time}  1645

  Speaking of the punitive damages provision, MacDonald called it ``a 
reasonable compromise'' and he urged insurance companies to embrace the 
proposal as ``the best deal they see in a long time.''
  Mr. Speaker, I ask that the full text of the editorial by John 
MacDonald be included in the Record at this point.

               [From the Hartford Courant, Mar. 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.
       Ganske'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 designed 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 his 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 form 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 gong 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'

[[Page 9510]]

     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-Dingall 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.

  It is also important to state what this bill does not do to ERISA 
plans. It does not eliminate ERISA or otherwise force large, multiState 
health plans to meet benefit mandates of each and every State.
  Now, this is an exceedingly important point. Just 2 weeks ago, I had 
representatives of a major employer from the upper Midwest 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 covering 
their 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--
let me repeat, Mr. Speaker--it would not alter the ability of group 
health plans to design their own benefit package. I want to be totally 
clear on this. The ERISA amendments in my bill would allow States to 
pass laws to hold health plans accountable for their actions, but it 
would not allow States to subject ERISA plans to a variety of State 
benefit mandates.
  Before closing, Mr. Speaker, I also want to address something that 
should not be in patient protection legislation. I am speaking 
specifically of extraneous provisions that could bog down the bill and 
severely weaken its chances for passage. 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 clear about this. While I 
strongly believe that Congress should consider ways to make health 
insurance more affordable, it would be a tremendous mistake to try to 
join these two issues together. It would present too many opportunities 
for needed patient protections to become sidetracked in fights over tax 
policy or the future of the employer-based 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 I was very 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 tax law so that individuals receive the 
same tax treatment as large businesses when buying health insurance. It 
does not make 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 has to pay all the cost with 
after-tax dollars.
  But ideas like Association Health Plans, also known as Multiple 
Employer Welfare Associations, and HealthMarts could, in my opinion, 
destroy the individual market by leaving it with a risk pool that is 
sicker and more expensive.
  Simply put, an Association Health Plan is a pool of individuals or 
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, or I would 
say lack of regulation, by the 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 health insurers.
  In a very real sense, ERISA remains the ``wild west'' of health care. 
Unlike State laws, which regulate quality, ERISA contains only minimal 
safeguards.
  Among its many 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 issue 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.
  In a letter to Congress in June, 1997, the American Academy of 
Actuaries 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.

  That letter is in reference to the bill that passed the House last 
year.
  The Academy went on to explain how those plans could undermine State 
insurance reforms:

       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 could 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 chances for bankruptcy and fraud.''
  These concerns were echoed in a jointly signed letter by the National 
Governors Association, the National Conference of State Legislatures, 
and the National Association of Insurance Commissioners. They 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.''
  Mr. Speaker, attempting to attach Association Health Plans or 
HealthMarts to patient protection legislation poses two very real 
dangers. First, Association Health Plans undermine the insurance market 
and can leave consumers without meaningful protections from HMO abuses. 
Second, I am very concerned that the opposition to AHPs and 
HealthMarts, if they are added to a patient protect bill, will bog down 
patient protection legislation and lead it to suffer the same death 
that it did last year. In other words, Mr. Speaker, Association Health 
Plans, HealthMarts, these are real poison pills.
  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 promise that I will fight efforts to derail 
managed care reform by adding these sorts of untested and potentially 
harmful provisions to patient protection legislation. 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.
  Finally, Mr. Speaker, time is flying. It is already the middle of 
May. The gentleman from Virginia (Mr. Bliley), the chairman of the 
Committee on Commerce, and the gentleman from Florida (Mr. Bilirakis) 
the chairman of the Subcommittee on Health, now have a draft of patient 
protection legislation prepared by the gentleman from

[[Page 9511]]

Oklahoma (Mr. Coburn), the gentleman from Georgia (Mr. Norwood) and 
myself. That draft should serve as the basis for the chairman's mark.
  The American Medical Association has just written me a letter that 
contains high praise for this draft. Mr. Speaker, I ask that the full 
text of this letter be included in the Record at this point.


                                 American Medical Association,

                                        Chicago, IL, May 12, 1999.
     Hon. Greg Ganske,
     Longworth House Office Building, House of Representatives, 
         Washington, DC
       Dear Representative Ganske: On behalf of the 300,000 
     physician and student members of the American Medical 
     Association (AMA), I would like to thank you for your efforts 
     in drafting a compromise patient protection package for the 
     Commerce Committee. The draft proposal, developed by 
     Representatives Tom Coburn, MD (OK) and Charles Norwood, DDS 
     (GA), and you, is a significant milestone in the advancement 
     of real patient protections through the Congress. We look 
     forward to working with you to perfect the draft bill through 
     the committee process and to pass a comprehensive, bipartisan 
     patient protection bill this year.
       It is imperative that a patient protection bill be reported 
     out of committee and be considered on the floor prior to the 
     July 4th recess. The AMA stands ready to help further advance 
     these important patient protections through the committee 
     process, the House floor and final passage.
       The AMA applauds the inclusion of ``medical necessity'' 
     language that is fair to patients, plans and physicians 
     alike. We are particularly pleased with the non-binding list 
     of medical necessity considerations that you have 
     incorporated into the draft bill.
       The AMA is pleased with the incorporation of the ``state 
     flexibility'' provisions that allow patient protections 
     passed by various states to remain in force. Allowing 
     preexisting patient protection laws to remain in force is 
     critical to the success of federal patient protection 
     legislation such as the draft bill.
       The draft bill also offers patients a real choice by 
     incorporating a ``point of service'' option provision. The 
     AMA supports this important patient protection because it 
     puts the full power of the free market to work to protect 
     consumers.
       We applaud your inclusion of a comprehensive disclosure 
     provision that allows consumers to make educated decisions as 
     they comparison shop for health care coverage. The AMA also 
     notes with great appreciation the many improvements that the 
     draft bill makes over last year's Patient Protection Act.
       The draft bill expands consumer protections with a 
     perfected ``emergency services'' provision. By eliminating 
     the cost differential between network and out-of-network 
     emergency rooms, the draft bill offers expanded protection 
     for patients who are at their most vulnerable moments.
       We support the strides the draft bill takes in protecting 
     consumers with a comprehensive ban on gag practices. This is 
     an important consumer protection that the AMA has been 
     seeking for more than six years.
       We commend the improvements incorporated in the ``appeals 
     process'' provisions of the draft bill. The bill represents a 
     major step toward guaranteeing consumers the right to a truly 
     independent, binding and fair review of health care decisions 
     made by their HMO.
       The April 22nd draft copy of the bill makes a strong 
     beginning for the Commerce Committee and the 106th Congress 
     on the issue of patient protection and reaffirms the 
     leadership role that you have assumed in the process. While 
     you have raised some concerns about the process, the AMA 
     stands ready to assist in completion of this legislative 
     task. The AMA wishes to thank you for your efforts and work 
     with you and the minority to pass a comprehensive, bipartisan 
     patient protection bill this year. We look forward to working 
     with you toward this goal.
       Respectfully,
                                   E. Ratcliffe Anderson, Jr., MD.

  Mr. Speaker, I sincerely hope that the chairmen of the committees of 
jurisdiction will not substantively change this draft and that they 
will keep it clean. It is also important that we move expeditiously on 
this issue. A strong patient protection bill should be debated under a 
fair rule on the floor by July 4.
  On the floor by July 4.
  Mr. Speaker, on the floor by July 4.
  I look forward to working with you and with all of my colleagues to 
see real HMO reform signed into law this Congress.

                          ____________________