Fixing a Health Loophole
California, home of most of the early HMOs, has passed dozens of laws since the mid-1970s to protect enrollees from fraud and abuse and guarantee certain patient rights. But because of a loophole in federal law, fewer and fewer HMO patients are actually protected. A fix is needed at the federal level.
An unintended quirk in a federal benefit law called ERISA, the Employment Retirement Income Security Act, exempts most employer-sponsored health insurance plans from state consumer protections. The law originally exempted only a few multistate employers who would have been unduly hurt by having to follow different laws in each state. Now almost all employer plans are so-called ERISA plans, with all the pertinent exemptions.
Next week, Congress is scheduled to begin debating a series of bills aimed at broadening the rights of the 125 million people who have slipped through this giant crack in consumer protections. Lawmakers ought to recognize two rights as fundamental:
* The right to appeal to an independent review board when an HMO denies coverage recommended by one of its doctors. Even HMO lobbying organizations acknowledge that ERISA plans have no requirement for an adequate grievance process--appeals to the HMOs’ internal review boards can take months and are rife with conflicts of interest. The solution is to require the kind of “unbiased, independent, third-party” appeals process outlined last year by Gov. Pete Wilson’s managed care task force.
* The right to obtain useful information about a health plan’s doctors, practices and policies. A good model is a new Texas law that will soon require HMOs to publicly report how regularly their members are screened for cancer, how outside observers assess their customers’ satisfaction and the difficulty of making appointments with their doctors. Congress should also require that HMO enrollees have access to the same assessments of cost, quality and efficiency that employers use to choose health plans.
Some in Congress want to go further, allowing a wide range of malpractice damages (currently such suits are limited, in ERISA plans, to collecting the cost of the procedure denied). The abuses that are prompting this measure make it understandable but it would be bad medicine for both employees and employers, driving up health care premiums. Some employers have even threatened to drop employee health insurance if Congress exposes them to malpractice liability. Costly mandates would also hit HMOs hard at a time when they are already down: Late last year, Aetna Inc., PacifiCare Health Systems Corp. and Oxford Health Plans all announced dismal earnings or losses, and last week Kaiser Permanente reported a record $270-million loss for 1997.
The key to fixing ERISA is not in radical measures like more lawsuits, at least not for now. The key lies in giving consumers fair and swift means to resolve disputes and access to the right information about their HMO plans. The key to fixing ERISA lies in giving consumers a genuine means to resolve disputes and access to the right information about their HMO plans.
