Should Managed Care Be Beyond the Law?
Should Managed Care Be Beyond the Law?
Remember the Patients’ Bill of Rights? Through the second half of the 1990s and into the Bush administration’s early months, it occupied political center stage. After Sept. 11, 2001, it all but disappeared from the public agenda. But it’s about to stage a comeback.
The reason? Within weeks, the U.S. Supreme Court will likely toss aside a body of law that has made the Patients’ Bill of Rights seem less relevant. During the mid and late 1990s, the fight for patient protection from nay-saying health plans was animated by a remarkable fact: Under the federal law governing employment-based medical coverage, health insurers could not be held accountable for wrongful denial of care. But in recent years, courts have dispensed with this immunity and empowered states to regulate health plans’ practices more generally.
Some states, including Texas, under then-Gov. George W. Bush, did so aggressively. In his final debate with Al Gore, candidate Bush spoke of having “brought Republicans and Democrats together … to get a patients’ bill of rights.” Texas, he boasted, was “one of the first states that said you can sue an HMO for denying you proper coverage.”
But the law candidate Bush touted is unlikely to survive through the spring. President Bush has abandoned his support for it. This year, his lawyers joined the managed care industry in asking the Supreme Court to strike down the Texas law – and to again shield HMOs from liability when wrongful coverage denials harm patients.
During oral arguments last month, the Justices signaled that they’re inclined to side with the managed care industry and the Bush administration. They showed little regard for the lower court rulings that have stripped away the industry’s immunity over the past several years.
If the Court restores this immunity, it will transform the balance of power between health plans and the 170 million Americans who rely upon private employers for their medical coverage. HMOs will once again be like foreign diplomats, free from legal accountability. The states will be powerless to intervene. Patients will be left with few defenses against health plans’ temptation to hold down costs by skimping on potentially life-prolonging care.
What’s amazing is that few, so far, have noticed the Bush flip-flop on this issue and the high stakes for most Americans. Part of the problem is that the issue seems, on the surface, so dry and technical. The convoluted federal statute that governs employment-based health coverage (and puts troublesome limits on state regulation) has a way of putting even policy wonks to sleep.
Reinterpretation of this statute to resurrect managed care’s immunity couldn’t be more poorly-timed. American prosperity and full employment during the late 1990s forced firms to ease some of the most egregious managed care practices. Businesses backed away from intrusive monitoring of medical decisions, rewards to doctors for withholding care, and other cost-control methods that made managed care bureaucrats into pop culture villains. But higher unemployment and soaring medical costs over the past few years have revived employers’ interest in trimming health spending. So the stage is set for a return to more robust cost control – and, perhaps, more aggressive managed care.
If the justices restore managed care’s immunity, Americans’ vulnerability to the industry’s excesses will leap to the forefront of the domestic political agenda. Congress will need to act to ensure that patients can sue health plans when wrongful coverage denials result in shortened or damaged lives.
The managed care industry’s campaign against legal accountability is short-sighted. Health plans could protect themselves from lawsuits – and build a foundation for consumer trust – by being candid about the cost-benefit trade-offs they make when deciding what treatments to cover. Today, in their contracts with consumers and their ads on the sides of buses, they promise all “medically necessary” care. In doing so, they feed expectations of care without regard for cost, and they invite feelings of betrayal when beneficial treatments are withheld.
Were health plans to be up-front about their rules for deciding when beneficial treatments aren’t worth the price, consumers could choose among plans on that basis. Insurers’ coverage responsibilities would be more clear-cut, wrongful withholding of care would be less frequent, and the threat of litigation would greatly diminish.
The industry is loath to pursue this approach. Its leaders worry that Americans will reject the frank weighing of benefit against cost. But the greater danger for managed care is the ebbing of popular confidence that comes with promises routinely made and not kept.
M. Gregg Bloche is a professor of law at Georgetown and an adjunct professor at the Johns Hopkins School of Public Health and writes frequently about domestic and international health policy.
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