Protect Patients From Congress

Commentary by John C Goodman

This week the Senate begins debate on the Democrat's Patient's Bill of Rights proposal, which seeks to substitute the opinions of Congress for the outcomes of the market and give trial lawyers a new feeding trough. Odds are the Senate will end the week by passing the Republican version, which is almost as bad.

How far we have come. In 1992, presidential candidate Bill Clinton promised to reform our health care system. Managed care, primarily in HMOs, would hold down costs, he claimed. Competition among HMOs would hold up quality.

The plan, ultimately designed by First Lady Hillary Rodham Clinton, was rejected - first by Congress, then by the voters. But the goals were largely achieved anyway. Today 160 million Americans, including 75 percent of employees who get health insurance from an employer, are in an HMO. And even those who have traditional insurance are getting a heavy dose of managed care. Yet polls show people are not particularly happy with the results.

So do the Clintons admit they were wrong all along? Not at all. Without skipping a beat the President now condemns the abuses of managed care as vigorously as he once promoted its promises. But throughout the flip-flop there has been one consistency: The belief that America should look to the federal government to solve its health care problems.

Today both the president and the First Lobby are still committed to Washington-based health care reform - but by steps rather than by leaps. Reflecting on her past health policy failures, Hillary Clinton told New Yorkers last week, "Now I come from the school of smaller steps."

According to its advocates, patient protection legislation would give patients greater access to doctors, specialists, emergency room care and prescription drugs. It also would limit or eliminate such other practices as giving doctors financial incentives to withhold care and "gag rules" that limit what they can tell patients.

Let's hope sober minds on Capitol Hill ask some important questions before rushing to legislate. Do we need these safeguards? How much will they cost? Will they work? According to Health and Human Services Secretary Donna Shalala, most of the largest and best health plans have already incorporated bill-of-rights provisions voluntarily. The reason is the marketplace. Employers and their employees are demanding greater freedom of choice and health plans are responding.

Managed care surveys bear the Secretary out. Two years ago the American Association of Health Plans, the managed care trade association, adopted a "Code of Conduct," including most of the consumer protections in the Patient's Bill of Rights. According to AAHP President Karen Ignagni in congressional testimony last March, "95 percent [of the members] were reported to be in compliance with at least six of the seven policies."

Even though patient protection legislation won't make health insurance any safer for the vast majority of patients, it will make it more expensive - in part because of additional monitoring and paperwork. According to the Congressional Budget Office (CBO), the Democratic bill will drive up the cost of health insurance by about 4.8 percent. That estimate may be on the low side. The actuarial firm Milliman & Robertson concluded that could increase the cost of health insurance by 23 percent. That would push up the cost of standard HMO family coverage from about $5,000 a year to $6,250 a year.

Higher costs mean fewer people will purchase health insurance, at a time when the number of uninsured Americans is 43 million and rising. And those who lose coverage would then join a chorus calling on Congress to fix the new problem.

Of course, one way to hold down the cost is through lax enforcement. From a political perspective, the ideal regulation is one that sounds good on paper but really doesn't affect anyone's behavior.

Most states have already passed bills restricting the practices of managed care. According to the National Conference of State Legislatures, between 1994 and 1998, 39 states passed patient protection legislation, and in all 50 states some 900 laws have been passed that affect managed care one way or another.

It is not clear how much difference all this legislating has made. For example, Texas gives patients the right to appeal denials of treatment to an independent body. So far, only a handful of decisions have actually been appealed and only in half the cases did the patient prevail. In New York, doctors complain that patient protections aren't working because the managed care bureaucracy is able to find ways around them.

A primary difference between the two parties is the issue of malpractice liability. Democrats want employers who currently enjoy the protection of the Employee Retirement Income Security Act (ERISA) to be subject to tort liability if something goes wrong. The Republicans, by contrast, want to enhance outside review, letting an independent panel make coverage decisions when patients and health plans disagree. A 1998 Barents Group analysis estimated that the Democrats' liability provision would increase health insurance costs by between 2.7 and 8.6 percent, whereas the Republican proposal would cost less than 0.5 percent. Other things equal, the GOP approach is better. But why chose either one?

The worse thing about managed care is employers and insurers telling doctors how to practice medicine. The worse thing about anti-managed care legislation is that it potentially puts politicians in the role of telling doctors how to practice medicine.

For example in prohibiting "drive through deliveries," Congress virtually decided how many days a mother should spend in the hospital after giving birth. In prohibiting "drive through mastectomies," many state legislatures are deciding how long women should stay in the hospital after breast surgery.

Fortunately, there is a third alternative: Medical Savings Accounts. When patients control their own health care dollars, doctors are free to make decisions based on their medical training and best judgment. To compete successfully, they must satisfy the needs of patients, rather than those of politicians and health insurance bureaucrats.

With MSAs, doctors are free to act as the agents of patients, controlling costs and insuring high quality care - which are supposed to have been the original goals of managed care.