Psychologists and Allies Trying to Reform ERISA; insurance industry wields big stick

By National Psychologist Editor
May 1, 1998 - Last updated: May 31, 2011

With more than 200 of the 435 House members signed on as cosponsors of H.R. 1415, legislation to fix ERISA, psychologists and other mental health professionals have recently directed streams of supportive letters and encouragement to Rep. Charles Norwood (R-Ga), the principal sponsor. 

     They rejoice in the prospect that, finally, 24 years after enactment of the Employee Retirement Insurance Security Act (ERISA), a loophole in federal law would be closed by Norwood’s bill, also known as the Patient Access to Responsible Care Act (PARCA). The loophole protects self-insured companies from being subject to stricter state than federal laws in their benefit plans, and shields managed care from being sued for denials of care. 

     However, the chances of an ERISA correction bill being passed by Congress seems less promising now than it did late last year following hearings by Norwood’s committee.

     The insurance industry has since pledged a massive lobbying effort and a national television campaign to defeat, delay or dissect Norwood’s bipartisan bill, and render it ineffective or unrecognizable.

     Reports emanating from insurance circles indicate that no expense will be spared to halt the effort to modify ERISA. Their hope is the revisions sought by Norwood and the proponents will falter as did the Clinton Administration’s 1993 Health Security Act under the pressure of the insurance industry’s “Harry and Louise” TV ads.

     Such organizations as the Health Insurance Assn. of America, the National Assn. of Manufacturers, the Assn. of Private Pension and Welfare Plans, and the U.S. Chamber of Commerce are expected to participate in the campaign to defeat H.R. 1415. 

     Among the early ads was the message “don’t raise our health care costs.” 

    In addition to Norwood’s bill, an opposing, insurance-industry backed bill has surfaced. It is sponsored by Rep. Harris Fawell (R-IL).

     Norwood’s bill would allow employees to sue employers and benefit managers in state courts and recover damages, including punitive damages, applicable under state law for personal injuries incurred in connection to health plan services.

     Russ Newman, Ph.D., J.D., APA’s head of the Practice Directorate, remains cautiously optimistic but recognizes 1998 is a congressional election year with a narrow “window of opportunity” that may close as early June, five months before the November election.

     But he also feels if health issues are important to the public agenda in 1998 that could affect the election outcome, it is likely to act on some form of legislation.

     Proponents of Norwood’s bill, he said, had best be prepared to fight an intense battle against its opponents whose claim will be that putting regulations in place will increase costs, and are also unnecessary because managed care will act voluntarily.

     Several months ago, Rep. Ted Strickland, Ph.D., the Ohio Democrat, predicted that managed care reform would be high on the congressional agenda in 1998. “Nearly every member of Congress is confronted weekly by constituents and their families who feel abused by managed care companies,” he said.

     If the premise is correct that most members of Congress deal constantly with constituents who scorn managed care, the chances of passing a managed care regulatory bill would improve exponentially–notwithstanding an imminent election or the insurance industry’s wealth.

     Newman had this to say: “For the American public, health care has risen to a priority issue. People believe something is broken and needs to be fixed. Members of Congress campaigning without addressing the public demand to fix this will be at a disadvantage.”

     Also, Newman noted there were some “surprising messages” during the congressional hearings on PARCA. “There was recognition on both sides of the aisle that health care is not something that can be appropriately done by a market-driven system,” he said. “Now even some Republicans are recognizing that a market-driven approach just doesn’t work.”

     Newman said there was also a recognition that there is “a systems problem which requires a systems solution, that if you try to legislate by body part and disease, you are tweaking without fixing. His premise was that if Congress is merely able to establish a temporary fix, it will have to return after the midyear election to correct the ERISA problems next year and in future years.

     When Norwood’s hearings late last year ended, his office issued the statement that “key conservative opponents of reforming the ERISA act admitted the need to modify the law in order to restore patient protections lost through pre-emption of state medical malpractice laws.”

     The statement continued that there was agreement that ERISA should be re-examined, and that patients damaged by insurance plan decisions should have legal recourse to redress their grievances.

     “ERISA has allowed health insurance companies to legally circumvent state law, including the most basic historical legal protection for health care consumers–medical malpractice,” the statement continued to quote Norwood. “ERISA plans were freed from any quality of care liability for their decisions–opening the door for the horror stories which have become all too common.

     “For over 20 years, the managed care industry has enjoyed a free ride, a ride that has cost the consumer both life and limb. PARCA simply restores the balance.”

     ERISA prevents persons injured by negligent actions of managed care to have their claims heard under otherwise applicable state laws.

     Here are some of the other provisions in the bill, H.R. 1415, known as PARCA, the Patient Access to Responsible Care Act.”

  • Health insurance plans can be sued for damages caused by their decisions.
  • People would have the freedom to go to the emergency room without having to ask permission from their insurance company.
  • Doctors would no longer be “gagged” by insurance contracts that restrict what they can tell their patients.
  • People would not be forced to travel out-of-town for healthcare when there is a local doctor or hospital available who can provide that care.
  • Patients would have the freedom to choose their doctor, hospital, and treatments if they are willing to pay the price.
  • Patients would be able to see a specialist on their doctor’s recommendation.
  • Turning people away from healthcare would no longer allow bonuses to be paid by insurance companies to claims adjusters, doctors, or hospitals who deny care.
  • Health plans would be limited in their ability to deny participation of a doctor or hospital based solely on the provider’s charges for services.
  • Details of insurance plans would have to be provided in laymen’s terms instead of health industry jargon.
  • Insurance companies would be required to provide prompt access to doctors and hospitals, and pay claims in a timely manner.
  • Patients would be able to appeal the decisions of their health insurance plan, both with officials from the plan and with outside arbitration if necessary.
  • Patients enrolled in insurance plans that require the use of plan-approved doctors would have the freedom to at least choose from the list of approved doctors, and would be able to change that decision as they feel necessary.
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