The insurer liability debate is heating up on Capitol Hill and in legislative chambers across the country, as 37 states plan to consider new or revised bills this session.
Five states with populations as dissimilar as Illinois and North Carolina have proposals in the hopper, and Tennessee lawmakers are mulling a range of options--including extending the right to seek damages from health plans to enrollees of TennCare, the state's ailing Medicaid program for the uninsured and uninsurable under age 65.
Karen Oldham, M.D., has felt the pinch from disparate positions-as an emergency room physician and now as chief medical officer of TennCare, through which some 1.3 million of the state's 5.7 million residents receive health coverage.
"There were times I would have wanted legislation like this because there were patients that couldn't get admitted that needed to be," Oldham says. "Now that I'm on this side, I still appreciate that sort of thinking, but at the same time I'm very attuned to the economics of the situation, the need for the whole system to reduce costs so we can continue to give care to all those who need it."
Therein lies the rub: Can patients' right to quality care be ensured without spelling doom to HMOs? Opponents say allowing healthcare consumers to sue opens the floodgate to litigation, thereby draining money from an already accountable industry. Proponents argue health plans will provide defensible care decisions only if forced to under the specter of civil liability.
"Liability is the stick. It's the enforcement tool," says Connie Barron, the Texas Medical Association's associate director of legislative affairs, who in 1997 stumped in Texas for the nation's first law sanctioning such lawsuits.
"Without accountability at the end of the day, there's nothing that makes sure the health plan doesn't blow off the patient, literally, to death."
Not so, says Harold Green, executive director of the Nashville-based Tennessee Association of HMOs. Internal and external review processes are the correct venue for redress. Rather than pre-emptively routing disgruntled patients to the courthouse, those processes should be evaluated and beefed up if deemed inadequate.
"Why go to that ultimate step until you see if the intermediate mechanisms are working?" Green says. "Instead, I see our Congress and our state legislatures rushing headlong into judgment, having determined the HMOs are at fault and we have to protect the public from the HMOs."
Green says there's plenty of blame to go around for the dissatisfaction fueling legislation, pointing his finger at the press for magnifying complaints from a small fraction of enrollees and thereby snagging the attention of lawmakers.
"If you say it long enough and often enough, it becomes the truth."
He also finds fault with those in his industry who were sluggish to respond to public criticism, reduce the "hassle factor" for providers or devote sufficient attention to consumer groups and government officials.
In Tennessee, legislators are struggling to keep TennCare afloat and prevent more insurers and providers left in the lurch from abandoning ship. Some fear insurer liability litigation could sop up residual capital from health plans.
Notwithstanding dire predictions, in the seven states with laws on the books allowing patients to sue insurers, few litigants have crossed that threshold.
But even when lawsuits constitute a trickle and not a torrent, Oldham says, HMOs still lose money preparing for war, whether or not a battle is forthcoming. And just one or two hefty judgments could bring many a plan to its knees.
The proposals in state legislatures come as a glut of class action lawsuits against insurers are wending their way through the court system. A Florida judge is set to begin hearing arguments soon on some of the merits of the cases against the nation's largest health insurers, including Aetna, UnitedHealthcare and Humana.
The outcome of such lawsuits hinges on a question awaiting federal clarification: Are self-funded plans, currently serving some 40% of the insured, shielded by ERISA from actions filed in state courts?
"Anytime you have this kind of frustration of state efforts to regulate an industry, you often will have these more aggressive class actions bubble up," says attorney George Parker Young of Friedman, Young, Suder and Cooke of Fort Worth, Texas. "That's just a symptom of what happens when you don't let individual patients pursue their rights in state court."
Young, who says 95% of his practice involves actions against HMOs, was the first to file under the 1997 Texas statute and is representing many of the 15 to 20 plaintiffs in such lawsuits there today.
"You've taken physicians who have been trained medically and you've forced them to make business decisions. You've taken MBAs and allowed them to dictate medical treatment. You've got a system that's upside down," says Young. "HMOs don't have any accountability to make decisions on a medical basis so they make them on a bottom-line basis. It's time for federal legislation that lets states regulate HMO quality of care to come to pass."
Debate yet crackles on the national front. Former President Clinton signed regulations Jan. 18 permitting Medicaid recipients to seek civil damages from health plans. President Bush, who has publicly supported the Texas model, promptly put those rules on hold his first day in office. As lobbyists bombard the Bush regime with their respective arguments, members of Congress are hammering out a compromise bill allowing patients to sue their health plans but capping damages.
The 2001 legislative session is young, and new laws could spring up in the next few weeks, says Rachel Morgan, senior health policy analyst for the National Conference of State Legislatures in Washington. "In a month or so, the whole picture could look different."