Anti-Managed Care Legislation

HMO-Backed Legislation Targets Innovative Competitors

Twenty-five of America's largest health maintenance organizations have come out in favor of legislation that would subject their industries to more government regulation. Critics say they have done so to stifle innovators and entrepreneurs who offer customers new services or better ways to provide health care.

One such operation is the Buyers Health Care Action Group in Minneapolis.

  • A group of large corporations there yanked the contracts they had given three local HMOs.

  • The employers then established a system for their 200,000 workers called ChoicePlus -- giving the employees cash to purchase insurance that pays for the services of what are now 26 doctor-formed networks or care systems.

  • ChoicePlus also furnishes consumers with information on the price, convenience and performance of each system.

  • ChoicePlus members say doctors are now directly accountable to them for health outcomes and customer service.

As more people and companies switch to ChoicePlus in Minneapolis, the HMOs are losing more subscribers each year.

The HMOs are fighting back -- not competitively, but by having everybody regulated. The HMOs want a state "consumer protection" law, which would eliminate the Buyers Health Care Action Group as a competitor. Similarly, federal legislation -- backed by the nation's largest HMOs -- would force the group to contract again with the local HMOs.

But another congressional proposal would let people buy their health care from an array of competing care systems -- while also encouraging the formation of entities called HealthMarts. These would resemble Minnesota's Buyers Health Care Action Group, which would be exempt from federal and state health-benefit regulations.

Source: Robert M. Goldberg (Ethics and Public Policy Center), "Why HMOs Now Love Regulation," Wall Street Journal, July 17, 1998.

California Agency To Micromanage HMOs?

Yesterday, a state commission recommended establishing an agency to oversee the administration of health maintenance organizations in California. Critics of the idea point out that no cost estimates were offered and suggest such an agency would probably try to "micromanage" HMOs.

The task force, headed by Stanford University economist Alain Enthoven, regarded as a father of the managed care movement, issued more than 100 recommendations, but did not prioritize them.

  • The task force recommends consolidating all state regulation of managed care plans under a new agency headed by a board or a single gubernatorial appointee.

  • It said the state should set up an "independent, third-party" review process for resolving patient complaints over denial of treatment.

  • The panel endorsed specific regulations, such as allowing a patient to continue receiving drugs for a chronic condition, even if the patient's health plan removes that prescription from its approved drugs list.

The proposals are expected to carry weight nationally in the ongoing debate over managed care.

  • More than 70 percent of insured Californians are in some sort of managed care plan -- more than in any other state.

  • Three-quarters of insured Californians were generally satisfied with their health care coverage, according to a poll commissioned by the task force.

  • However just over 40 percent said they had experienced some problems in the past year.

The California Association of Health Plans said it was "disappointed that the task force really didn't take a systematic approach to the health plans and review what works and what doesn't," but instead endorsed a grab-bag of proposals to satisfy various interest groups.

Source: Todd S. Purdum, "Panel Seeks HMO Overseer for California, a Bellwether," New York Times, January 6, 1998.

Managed Care "Gag Clauses" Disappear, But Bureaucratic Cures Advance

Some policy analysts characterize the "Patient Right to Know Act" (H.R. 586) sponsored by Rep. Greg Ganske (R-Iowa) as an unnecessary and dangerous step toward government-run health care. Rep. Ganske's bill would ban contractual "gag clauses" allegedly used by certain managed health care companies to prohibit doctors from telling patients about expensive treatment options.

  • Patients and doctors have rightly expressed outrage at this practice; however analysts say the market has already weeded out "gag clauses."

  • When the General Accounting Office studied the issue, it scoured nearly 1,200 managed care contracts from across the country and found exactly zero "gag clauses."

  • Yet a study of a previous draft of H.R. 586 by Multinational Business Services, Inc., found it would take up to 7,000 new federal employees to implement.

Once in place, say analysts, these bureaucrats would lobby for and impose new mandates on managed care companies, the cost of which would be passed on to consumers through higher premiums.

  • The Congressional Budget Office estimates that every one percent increase in premiums causes more than 200,000 Americans to lose coverage.

  • And a Heartland Institute study found the federal tax code traps millions of Americans in their employer's health plan by making it twice as expensive for them to purchase their own coverage.

Ganske says his bill would not lead to "ClintonCare," but numerous backers of President Clinton's 1994 health plan support H.R. 586 and plan to broaden its scope.

Source: Michael F. Cannon, "'Gag Clauses' in Managed Care Contracts: If It's Already Fixed, Don't Fix It," Capitol Comment Number 173, January 28, 1998, Citizens for a Sound Economy, 1250 H Street, N.W., Washington, D.C. 20005, (202) 783-3870.

For text http://www.freedomworks.org/informed/issues_template.php?issue_id=526&isitsearch=1&search1=Gag

Legislating Medical Decisions

Some states and Congress are trying to legislate how long patients must stay in hospitals -- an area they know nothing about, charge critics. Mandates for patients undergoing maternity and mastectomy procedures are the most common.

The issue has become politicized because of charges some managed care plans are pushing patients out of hospitals after too short a time, or performing procedures on an outpatient basis, with no overnight stay in a hospital.

For example, of simple mastectomies covered by traditional fee-for-service health insurance, 18 percent were performed on an outpatient basis in 1994, compared to 24 percent for health maintenance organizations (HMOs). However, 9 percent of radical mastectomies were performed on an outpatient basis under fee-for-service plans, compared to only 5 percent under HMOs.

Length-of-stay mandates have become common:

  • Forty-three states have laws stipulating how long a woman may remain hospitalized after the normal delivery of a child.

  • Fifteen states have laws governing length of stay after breast cancer surgery.

  • Congress in 1996 passed a law requiring health plans in all states to offer a 48-hour maternity stay.

The director of the Johns Hopkins Breast Center in Baltimore reports that nearly 90 percent of patients there leave within a day of surgery. Many patients prefer to recover at home, he says, and lengthened hospital stays can be risky because patients are exposed to infection from other patients.

Critics say that length-of-stay laws take away the opportunity for future cost reductions as technology advances. As medicine improves, patients recover in shorter times than they did in the past. Mandating how long patients can remain in hospitals will discourage efforts to find quicker cures and procedures, according to some experts.

Source: Laura M. Litvan, "The Boom in 'Drive By' Surgery," Investor's Business Daily, June 18, 1998.

Panel Debates Patients' Rights

At a time when Congress is considering numerous bills to regulate health plans and health insurance companies, a presidential advisory committee has recommended a wide range of new rights for patients, including the right to appeal denials of care or coverage by insurance companies and health maintenance organizations.

But some managed care company executives warn that the proposals could increase the cost of health insurance, cause some businesses to curtail coverage and leave more people uninsured.

The 34-member Advisory Commission on Consumer Protection and Quality in the Health Care Industry, -- which includes executives of managed care companies, doctors and consumer advocates -- said that all patients, in private as well as government-funded programs -- should have right to appeal grievances to an outside authority, as Medicare patients do now.

Among the rights of consumers suggested in the panel's draft report:

  • A choice of doctors within a health plan, and the ability to go outside the plan at no extra cost if the medical expertise isn't available within the plan.

  • Increased direct access to medical specialists for those with complex or serious medical conditions, and continuing treatment for up to two months from the same specialists for those who switch health plans.

  • Coverage of emergency room care by health plans, even if it turns out emergency care wasn't necessary.

  • Disclosure by doctors of factors that could influence their advice to patients -- such as their investment in hospitals, clinics, home health care agencies and diagnostic imaging clinics.

The draft report did not say how these rights should be enforced. The panel plans to submit its final recommendations to the President in late November.

Source: Robert Pear, "Panel of Experts Urges Broadening of Patient Rights," New York Times, October 23, 1997.

Health Care Cost And Quality

Observers say that when it comes to health care, Americans want contradictory things: they don't want costs to rise; but they don't want limits on their own care. Some say there is only a loose relationship between health and health spending, while lifestyle choices dramatically affecting well-being.

Thus there is room to control costs through managed care without harming health:

  • Patients with similar conditions often receive different treatments with little difference in outcomes but significant differences in cost, according to studies by John Weenberg of the Dartmouth Medical School.

  • Earlier this year a presidential task force found the main impediment to medical quality is not managed care's denial of care, but mistakes by doctors and hospitals.

  • For example, one study found that 23 percent of decisions by doctors to use ear tubes for children with chronic ear infections were clinically wrong.

Despite the cost controls instituted by managed care, Americans are evidently healthier:

  • In 1996, life expectancy was 76.1 years, up from 73.7 years in 1980, and death rates have dropped for all age groups except those over 85.

  • Between 1990 and 1996, death rates were down 9 percent for heart disease and 4 percent for cancer.

  • And since 1990, infant mortality has fallen 14 percent for whites, 14 percent for blacks and 16 percent for Hispanics.

But health care spending will rise as Baby Boomers age. In 1996, workers 45 to 64 years old with employer-paid insurance had health costs twice those of workers 18 to 44, estimates the medical consulting company Medstat. In 1997, Medicare cost $208 billion; but conservative estimates show its cost as a share of gross domestic product doubling by 2020. Health care spending will reach $2 trillion, nearly 17 percent of GDP, by 2007.

Source: Robert J. Samuelson, "Having It All: Americans Want the Impossible When It Comes to Health Care," Newsweek, September 28, 1998.

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