Health maintenance organizations (HMOs) became popular with employers and insurance companies because of the high cost of health care. Seventy-five cents of every health care dollar is paid by someone other than the patient -- either the government or an insurance company. The majority of Americans -- 70 percent in a recent poll -- report they are satisfied with their HMO care.

But critics warn the Clinton administration and its congressional allies want to demonize HMOs by letting people sue them, not for withholding services they promised to provide (which patients already can), but for services patients feel should have been provided. This, critics warn, will only cause HMOs to abandon attempts at managed care and enrich trial lawyers. This despite the fact that:

• A 1995 survey estimated coverage was initially refused less than six percent of the time.

• Treatment was later provided after internal appeal in 60 percent of those cases.

• In the remaining cases, formal arbitration would be less costly and more effective than liability suits.

Nevertheless, HMO reform, disguised as "patient protection," could make more political news in 1999.

• John Edwards, who ousted Lauch Faircloth (R) in the North Carolina U.S. Senate race, is a leading advocate for patient protection.

• Ernest Hollings (D-S.C.), called "one of the tort bar's best congressional friends," used the issue to defeat his challenger.

• At the state level, Texas passed an expanded HMO liability law last year, and similar legislation has been introduced in a score of other states.

But this, critics warn, is blaming HMOs for being HMOs. Rather than more legislation, what's needed is more patient involvement in choosing plans and services. That means expanding Medical Savings Accounts and reforming Medicare and Medicaid.

Source: Doug Bandow (Cato Institute), "Turning HMOs Into Legal Gold," Investor's Business Daily, November 9, 1998.