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HMOphobia in Congress

National | Soon Americans may be able to sue their health-maintenance organizations in state courts. That is, if they still have health insurance

Issue: "Schundler's bliss," July 7, 2001

and Bob Jones in Washington-Stepping out of a Senate lunch into television spotlights, Senate Majority Leader Tom Daschle came to tell reporters that his mild-mannered, Mister Rogers demeanor didn't mean he wouldn't toe a hard line on pushing a so-called "patients' bill of rights." He repeated his threat that he would delay the summer break unless the bill passed: "We will stay here for whatever length of time it takes, and I know that because I've not been leader that long there may be some question about my resolve. There will not be any question about my resolve at the end of the week if we haven't finished. We will be here." Elections are far too infrequent for Washington pundits to play the parlor game of Who's Got the Power? So the health-care battle became the first test of Mr. Daschle's clout with his new majority. He may have failed to ram the bill through as quickly as he would have liked, but its very presence on Capitol Hill's front burner is a testament to the Democrats' renewed agenda-setting power in the wake of Sen. Jim Jeffords's walk across the partisan divide. Sen. Edward Kennedy first drafted a bill pressing new standards and the right to sue health-maintenance organizations (HMOs) five years ago, only to see it bottled up repeatedly by the Senate's GOP majority. A similar bill in the House of Representatives attracted 68 Republican votes, but the measure died of neglect in the Senate. Now that they were in control, Senate Democrats clearly felt they had public opinion on their side, and moved quickly to make HMOs public enemy No. 1. More than 180 million Americans have private health insurance, and liberal legislators loved to share nightmare stories of denied claims and delayed reimbursements at the hands of faceless private corporations. Democrats circulated a survey boasting, "HMOs and health insurance companies are almost as disliked as oil companies." Polls showed comfortable majorities generally favored "patient protections," but they also found support dropping off or collapsing when pollsters presented people the possibility that such "protections" may come at a price, namely increased premiums or employers dropping their insurance. With a steady eye on the polls, Republicans stressed that they, too, wanted to pass a "bill of rights," and suggested they favored plenty of new mandates for insurers. When the Senate voted on June 22 to guarantee HMO members access to expensive clinical trials, only one senator-Wyoming Republican Mike Enzi-cast a "no" vote. The two parties quickly agreed that policyholders had a right to other benefits, as well, including emergency-room care, ambulance service, access to medical specialists, OB-GYN care, longer hospital stays following breast cancer surgery, pediatric care, and a broader range of prescription drugs. Had the Democrats simply settled for more mandates, Mr. Daschle might not have had to threaten summer break, but that didn't offer any political advantage. The bill bogged down on the question of how best to guarantee that HMOs and insurance companies would give patients all these new "rights." To the party funded largely through the donations of trial lawyers, the answer was obvious: lawsuits. Attorneys, led by the Association of Trial Lawyers of America, gave $124 million in the 2000 election cycle, the Center for Responsive Politics found, up from $69 million in 1998 and $50 million in 1994, and 70 percent (90 percent of ATLA donations) went to Democrats. Sen. Kennedy, Sen. John Edwards, who made his millions as a trial lawyer, and in another showy anti-Bush stand, Republican Sen. John McCain sponsored their bill. Under a 1974 law, insurance companies have been exempted from lawsuits in state courts because their plans usually cover patients in a number of states with a patchwork of laws and regulations. The McCain-Edwards-Kennedy bill would change all that, allowing patients to sue their health plans in state courts, where juries are often sympathetic and damage awards can be huge. HMO executives' spines shivered at the thought of the millions (sometimes billions) of dollars juries have assessed to tobacco companies to award to lifelong smokers who ignored the surgeon general's warning. What would happen when death or injury came to an innocent HMO enrollee? Republicans complained that would create a "liability lottery" in which unscrupulous lawyers would file frivolous suits in hopes of striking it rich with just the right jury. They argued that the more restrained federal courts-where huge damage awards are routinely overturned-was the right place for such lawsuits, in keeping with the 1974 law. The American Association of Health Plans, a lobbying group for HMOs, trotted out a new poll which found that 66 percent of respondents said trial lawyers would be the biggest beneficiaries of the new lawsuits, while only 22 percent thought patients would benefit most. But the Democratic majority held firm, so Republicans tried a different strategy. In a compromise bill introduced June 26, they allowed for limited lawsuits in state courts, provided the noneconomic, "pain and suffering" damages were capped at $500,000. With the unlimited liability of the Democratic plan, they argued, insurance companies would have to raise their rates sharply, leading many smaller companies to drop health-care benefits completely. Indeed, in a veto threat issued by the White House on June 21, President Bush warned the Democrats' bill "could cause at least 4 to 6 million Americans to lose health coverage provided by their employers." The lawsuit controversy didn't end there. Because companies offer insurance to their employees-and sometimes decide what they will and will not cover-Democrats wanted to hold employers legally liable as well. The McCain-Edwards-Kennedy bill would allow aggrieved patients to sue their employers if their plan failed to provide needed medical treatment. One lawsuit could cripple or even bankrupt a business. Republicans responded with an amendment offered by Sen. Phil Gramm of Texas providing employers with blanket immunity to such lawsuits. Without such immunity, they argued, companies would discontinue their insurance plans rather than face the specter of legal liability. "Do [companies] have to provide this benefit? No. It's very expensive, in many cases not even appreciated, so I'm afraid the net result is a lot of employers would drop health care," said Sen. Don Nickles of Oklahoma, the GOP whip. "We shouldn't do harm. We shouldn't increase the number of uninsured. We shouldn't make health care so expensive that people can't afford it." But Mr. Gramm's immunity amendment lost, 57-43. In the aftermath, Senate moderates talked with President Bush about crafting a compromise that could spare large companies offering their own insurance plans by creating a "designated decision-maker" position that would accept liability for them. Meanwhile, on the House side, Speaker Dennis Hastert and Rep. Ernie Fletcher (R-Ky.) unveiled a bill friendlier to the president's principles, so the conference bill could be more acceptable to the White House. While the overall direction of the HMO-regulation debate keeps shifting toward more government control of the American health-care system, liberals feel that these bills are a very small step toward a more progressive future where purportedly disinterested government managers replace profit-motivated CEOs. Liberal columnist Michael Kinsley joked that the debate was over "liberalism a la mode," or a seemingly painless government action where the costs are indirect fee increases rather than direct tax increases. Conservative health experts also looked beyond the boundaries of the current debate. Heritage Foundation analyst James Frogue suggested the problem was the employer-based health insurance system. Most Americans wouldn't think of letting their employer choose their car or homeowners' insurance policies. "So why should they let their employers choose a health insurance plan for them and their families? If workers had a real choice, insurance companies would have to compete customer by customer for business, forcing them to become more responsive without a 'patients' bill of rights.'" Robert Goldberg, a senior fellow at the Dallas-based National Center for Policy Analysis, says all the focus on private health plans ignores the government's own record. "For all the hot air about how horrible HMOs are, Medicare is the worst of the lot: no right to sue for pain and suffering, claims denied as medically unnecessary at 10 times the rate in private health plans, administrative reviews of disputes that run for months and years, sloppy and substandard treatment that becomes the norm for 90 percent of 'plan' members." In March, a federal judge in Detroit ruled that Medicaid beneficiaries have no right to sue state officials to force them to cover benefits outlined in federal Medicaid law. Conservatives don't want lawsuits to add to the cost of these government programs, but they see a double standard in all the HMO-bashing. White House spokesman Ari Fleischer told WORLD: "I think that's another example of the fact that people have one standard they want to apply to others and a different standard that they want to apply to the government. The president believes the standard should be as close to similar as possible." But as the president bows to the need to avoid Democrats' nasty 30-second ads on HMO-wronged little kids with bad kidneys, Sen. Daschle may find the capital's power-sniffers hold him in growing esteem.

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