The growing antipathy toward managed care is the most
under-reported health-care story of this Congress.
Trying to weed out unnecessary treatments, HMOs have employed
spending constraints that can actually impose higher costs on
patients. By now, everyone has heard the horror stories about how
HMO rules and restrictions subjected patients to unnecessary
suffering. Americans are right to rage.
Some members of Congress believe they have the cure for these
problems. The Patient Access to Responsible Care Act (PARCA),
sponsored by Georgia Republican Rep. Charlie Norwood (H.R. 1415) and
New York Republican Sen. Al D’Amato (S. 644), has collected 211
co-sponsors and claims to offer protection to managed-care
But will PARCA really protect patients? Or is PARCA a shield to
protect providers from the spending constraints the federal
government has unwisely left to managed care?
The media should be prepared to pursue four avenues of inquiry
that cut to the heart of PARCA.
n Who’s to blame for managed care’s excesses? America’s turn
toward managed care is largely the result of federal tax and
entitlement policy that has shifted the burden of paying for health
care away from patients to employers or the government itself. In
this environment, patients have little incentive to keep spending
down themselves. Why should they make fewer trips to the doctor, as
long as someone else is paying?
As a result, employers and the government must control spending,
or find someone who can. Managed care is nothing more than the
market’s response to government’s meddling.
n Is PARCA "patient protection" or just what the doctor ordered
-- for himself? Managed care controls spending by second- guessing,
haggling with, and even refusing to cover many providers. Providers
have responded by passing nearly 1,000 state laws that require
insurers to cover -- and require consumers to buy coverage for --
These powerful special interests include chiropractors and
psychologists (coverage mandated in 41 states), dentists (34
states), and nurse midwives and podiatrists (30 states). Twelve of
the most common such laws increase premiums by as much as 30
PARCA, on the other hand, would require all consumers to buy
coverage for every type of provider licensed in their state.
Moreover, PARCA would apply these mandates to self-funded employer
plans that state mandates can’t touch. PARCA’s remaining 140
mandates read like a list of provider complaints against managed
The actuarial consulting firm Milliman & Robertson, Inc.
estimates that just a few of PARCA’s mandates would increase
premiums an average of 23 percent nationwide, while some managed
care enrollees would see their premiums almost double. According to
Congressional Budget Office data, that would make coverage
unaffordable for an additional 4.6 million Americans, leaving them
n Assuming government is partly to blame, how can Congress
correct it and what would it look like? Employers cannot measure a
subjective factor like quality as well as they measure price. Thus,
HMOs compete for their business chiefly on price, not quality.
When an unsatisfied consumer leaves his company’s low-price,
low-quality health plan to buy his own coverage, the federal tax
code hits him with a huge tax penalty that effectively forces him to
pay twice as much as his employer did for the same coverage.
Eliminating this penalty would expand consumer choice, allow
employees to walk away from company plans, and force HMOs to compete
for the customers they once held captive.
n Follow the money. Support for PARCA is coming not from
patients, but from providers, particularly alternative medicine
providers locked out of managed-care networks. Forcing consumers to
buy coverage for their services would be a huge cash cow for these
On the other side are health insurers (who fear losing business)
and employers (who fear higher premiums). Neither group is
particularly interested in expanding consumer choice -- they just
don’t want to see their ox gored.
Managed care is not perfect. The only way to improve it is to
allow consumer choice and competition to govern its operation. If
PARCA is passed, it will rob consumers of even more control over
their health care, and reporters will continue to see a steady
stream of horror stories about managed care and a sharp increase in
horror stories about the uninsured.
Michael F. Cannon is a health-care policy analyst at
Citizens for a Sound Economy Foundation. His full report on PARCA
can be seen at www.cse.org.