Middle Path in HMO Reform

Partisan debate as blistering as the summer heat has swept Washington this week, with Senate Republicans fiercely denouncing the Democrats’ ambitious HMO reform bill. Today, Senate Majority Leader Trent Lott (R-Miss.) reportedly plans to deliver a coup de grace, using his “final amendment” authority to substitute the Republican Party’s nominal HMO reform bill for the Democrats’ extensive one. That would be a big mistake.

While Lott rightly criticizes the Democrats’ bill for its prohibitively expensive provisions, the GOP alternative goes much too far in the other direction, with loopholes large enough to drive an ambulance through.

Lott, along with Senate Minority Leader Tom Daschle (D-S.D.), would have more to gain by allowing full consideration of a moderate, bipartisan compromise bill that Sens. John H. Chafee (R-R.I.), Bob Graham (D-Fla.), Joseph I. Lieberman (D-Conn.) and Arlen Specter (R-Pa.) plan to introduce today. Blending HMO reforms proposed by both parties, Chafee’s compromise charts a sensible middle course through two particularly controversial issues:

* Giving patients the right to appeal their health plan’s decisions. The Republican bill is rife with conflicts of interest, like allowing an HMO to decide whether a patient can appeal and requiring independent reviewers to abide by the HMO’s definition of what’s medically necessary.

Chafee’s compromise would allow patients to appeal without their HMO’s approval, prohibit HMOs from selecting reviewers and base medical necessity on standards that independent physicians believe to be consistent with best medical practices.

* Holding health plans liable for denying necessary care. The Republican bill supports the status quo, under which most patients can sue their managed care plan only for the cost of the treatment unfairly denied, a standard under which lawyers won’t take a case. The Democratic bill essentially would lift all liability caps, potentially pushing some employers to drop or reduce health coverage for fear of lawsuits. Chafee’s bill would allow patients to collect some economic damages, including the cost of mounting a lawsuit.

With Chafee’s compromise, senators can avoid the Democrats’ prohibitive costs and the GOP’s poor patient protections. They can also prove themselves capable of rational action in a political season.