From the President By Herbert S. Sacks, M.D. APA President

Mercer/Foster Higgins surveys, a widely followed barometer of health care costs, found recently that 85 percent of American workers with health insurance now belong to some kind of managed care plan (PPO, point of service, HMO), up from 52 percent in just four years. Traditional fee for service covers 15 percent of all employees with health benefits. Businesses have held down overall medical cost increases to 0.2 percent last year by moving employees to lower-cost plans. But now there is no place to go for employers, the lemon having been squeezed dry.

For the calendar year 1998, there are estimates of increases in health costs of 7 percent to 10 percent. Traditional fee-for-service insurers, competitive with managed care, have driven their prices down even as employees demand more options and benefits. In response, managed care companies have engaged in aggressive pricing that reduces profitability and scares stockholders, to whom they have a fiduciary responsibility to increase the bottom line.

Cherry-Picking

APA criticized managed care companies for cherry-picking-signing up larger numbers of low-use, healthy young people and filtering out the aged, the chronically ill, the poor, and minorities. (On a parallel track, they calculatedly reduced or excluded qualified minority physicians from HMO panels.)

The companies often recruited physically able Medicare and Medicaid patients by setting up offices on fourth-floor walk-ups in poor neighborhoods. But now with 85 percent of employees covered by managed care, cherry-picking has been less effective since many high-cost consumers are on managed care's rolls.

Financial Setbacks for Managed Care Companies

Several leading companies, including not-for-profit Kaiser-Permanente, Aetna's U.S. Healthcare unit, Oxford, and Pacificare have taken severe financial hits. Reports on lawsuits by medical societies and hospitals, state attorneys-general investigations producing heavy dollar penalties, and state insurance department inquiries into poor planning and management appear in the daily print media. In calendar year 1996 Oxford delayed payment by 92 days to providers and, according to calculations by Princeton's Uwe Reinhardt, earned more than $400,000 daily on the float, with $2 billion in the bank.

New technology, new medications-especially in psychiatry-and changing regulations and laws are putting sharp pressure on the cost-increase curve. At least 40 states have passed pro-patient (consumer) anti-managed care legislation, and the Congress is considering several wide-ranging bills. The companies have been terrified by the passage of the first law in the nation last year in Texas, drafted by state Senator David Sibley, that permits patients to sue health plans for malpractice over decisions to deny coverage for treatment. The statute, which has been in effect since September 1997, is being appealed by Aetna in the Federal District Court in Houston, and the dispute may be decided eventually by the U.S. Supreme Court.

President's Advisory Commission

The President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry issued its report in November 1997-the so-called patient (consumer) bill of rights. The commission urged that Congress put its recommendations into law. It would require health plans to disclose key information about doctors and hospitals, create appeals procedures when they deny care that patients believe is medically necessary, preserve the confidentiality of medical records, and provide reasonable access to specialists and emergency services. Because health plans have not corrected their own deficiencies, and because states, under ERISA, are prohibited from regulating the health plans of most large employers (which have a total of 120 million employees), some of these recommendations will come about only if the Congress acts.

APA's review of the patients' bill of rights (Psychiatric News, November 21, 1997) praised the report but expressed concern about its failure to address clearly parity coverage for mental illness, the limited safeguards for the confidentiality of medical records, and the weakness of continuity of specialty care (60 days to make transitions from a current provider to a new one). Moreover, the bill of rights does not require employers to provide choice of plans.

In anticipation of the release of the bill of rights, three panicky HMO's-Kaiser-Permanente, HIP Health Insurers of New York, and the Group Health Cooperative of Puget Sound, called for "legally enforceable national standards" for HMO's. This move was designed to preempt the bill of rights proposals and likely federal legislative action. The worried trio never indicated who should enforce the "standards."

For many of us who have fought managed care's depredations upon our patients in need and our professionalism, the dramatic HMO reversal reminds us of notes left by serial killers, "Stop me before I kill again!"

Organized Opposition

The release of the bill of rights elicited a powerful response from Senator Trent Lott, the Republican majority leader from Mississippi, and Representative Dick Armey (R-Tex.), who are pushing hard for health care reform, but in the wrong direction. They are mobilizing corporate lobbyists against Congressional efforts to pass patient protections, claiming that we do not need more costly regulation. But the bill of rights excludes needlessly costly rules, and there are some protections that only the Congress can provide by amending ERISA.

Late in January the folks who brought you "Harry and Louise" TV commercials in 1994 unveiled a $1 million campaign to block the President's initiative and Representative Charlie Norwood's bill, cosponsored by more than 90 fellow Republicans. Norwood is a Republican dentist from Georgia. Senator Alfonse D'Amato (R-N.Y.) introduced the bill in the Senate. The anti-bill of rights coalition, with deep pockets, includes the Health Insurance Association of America, the National Association of Manufacturers, the Business Roundtable (representing 200 of the nation's largest companies), and the HMO lobbying group, the American Association of Health Plans. Lott told the lobbyists, "Get off your butts; get off your wallets."

Executive Order

At this writing (February 21), Mr. Clinton flew in under the radar of Capitol Hill and issued an Executive Order mandating that Medicare, Medicaid, and all other federally sponsored programs implement the patient bill of rights. The order will cover 85 million Americans, including 38 million Medicare recipients and 30 million low-income Americans on Medicaid. Thus, with a stroke of the pen, 40 percent of all Americans will be covered by the bill of rights. But remember, 120 million more under ERISA working for larger employers are not covered and thus are not addressed by the Executive Order.

There is increased heat now from the Republican leadership on D'Amato-Norwood cosponsors, some of whom have dropped off the cosponsorship list like autumn leaves. As a testament to the democratic political process, the battle is far from over. Will the Congress follow Norwood's courageous lead and extend the bill of rights to everyone? Will the Congress respond to the public outcry for fairness and decency in the delivery of health care by amending ERISA?

Call to Action

I call upon every district branch and state association to advocate forcefully APA's powerful support of the patients' bill of rights to their U.S. Senators and Representatives. This is an extraordinary time in our recent history, when individual members must rise to challenge and redress injustices suffered by our patients and our professional values.

Tell me, what will you do? My fax number at APA is (202) 682-0432.