Round Two for HMO Reform

Despite the sound and fury surrounding HMO reforms last year, little was done to demonstrably improve the quality of managed care for most Americans. More than 80 reform bills were introduced in Sacramento, but only one made it into law. And in Washington, a new federal report shows that the Health Insurance Portability and Accountability Act of 1996, which had been hailed as the most significant piece of health care justice in a decade, has hardly lived up to its promises.

The Government Accounting Office report shows that insurers have been complying with the act’s requirement to offer policies to those previously denied coverage due to preexisting medical conditions but that last year those policies were offered at up to six times the standard rates. That puts them beyond the reach of most Americans, right where they were before the so-called reform legislation was passed.

Frustration with failed legislation is now inspiring two new HMO reform movements. The first--involving highly partisan campaigns--was launched at the federal level in Washington this week. Preaching to HMO patients, Democrats floated legislation to give them broader rights to sue their HMOs and to be guaranteed access to experimental medical treatments. The GOP, pitching its approach to employers and HMOs, proposed new tax incentives to help workers and small businesses buy health insurance. These partisan campaigns are likely to end in the same logjam that stymied reform last year.

Prospects are brighter for the second managed care reform movement--new bipartisan coalitions for moderate reform at the state level. California is at the forefront of this movement, with both political parties and the California Assn. of Health Plans, an HMO lobbying arm, lining up behind a set of what the association calls “reasonable, responsible” reforms.

The challenge now facing legislators in Sacramento is how to set these reforms into strongly worded laws. For instance, Assembly Republicans have joined Democrats in supporting legislation requiring HMOs to establish independent review boards to which consumers could appeal if their HMO denied them coverage recommended by their doctors. The wording of the legislation has yet to be determined. A weak bill could allow HMOs to use the review boards as a device to avoid arbitration and lawsuits. Strong legislation would establish a clearly independent appeal process that HMOs would be required to follow or face stiff fines.

Americans’ simmering frustration with managed care is evident in numerous national polls and even in movie theaters: Witness the thunderous applause that audiences have been giving the character who trashes her HMO in “As Good as It Gets.” The best hope of allaying these frustrations lies not in the impractically radical reforms now being pushed by some Democrats in Washington but rather in the sensibly moderate consensus gathering steam in Sacramento.