August 24, 2001

August 24, 2001 | WebMemo on Health Care

The Upcoming Conference on the Patients' Bill of Rights: WillCongress Resort to Another Double Standard in Health Care Policy?

INTRODUCTION

Two Big Questions.
We interrupt your August vacation to pose Two Big Questions: When House-Senate conferees return to finish their work this fall on the patients' bill of rights legislation, will that legislation apply to them in exactly the same way it applies to every other American? And under the final version of the patients' bill of rights, will aggrieved patients and their doctors enrolled in Medicare, Medicaid, and Veterans Administration health programs have exactly the same rights to contest bureaucratic determinations of medical necessity when those determinations are used to deny coverage and claims, and then to file suit against federal officials and recover damages, as those now enjoyed by private patients enrolled in private-sector plans?

Apparently not. The reason: Many powerful Members of Congress and their allies in official Washington do indeed believe that there is, and should be, a double standard in fashioning public policy, especially health care policy. What applies to private-sector businesses, organizations, employees, and private health plans is not to apply to public-sector bureaucracies, employees, or government health care programs.

The proof ? Examine the response of House leaders in both political parties to the Nickles amendment to the Senate version of the patients' bill of rights legislation (S. 1052).[1] The Nickles amendment would apply the terms and conditions of that bill, including the patients' right to sue, to all federal health care programs, including the large Medicare, Medicaid, and Veterans Administration health programs, as well as the military health care program, the Indian Health Service, the State Children's Health Insurance Program (SCHIP), and the popular Federal Employees Health Benefits Program (FEHBP), which covers Members of Congress and federal workers and retirees. The Nickles amendment  represents a significant legislative attempt to establish fairness and equity in the application of a major federal bill. The House bill (H.R. 2563), as amended, has no such language.

According to The Washington Post, the Nickles amendment was an "unexpected" addition to the Senate patients' bill of rights debate, and it "jolted" officials of federal employee health plans.[2] Curiously, the opposition to the amendment in the federal employee community is not much different from that found among private-sector employers and health plans: a genuine fear of higher than necessary health care premiums, a fear of regulatory disruption of a popular program, a fear of lawsuits against federal employee plans in the several states, and a concern over reduced access to affordable health insurance for lower-income federal workers.[3]

Uncertain Future Costs.
Employers and health insurers naturally fear higher health care costs, translating into higher premiums and loss of coverage. The plans will have incentives to avoid any conflict with physicians over treatments, and will simply pass on costs to employers and patients. Employers and insurers also fear that the true costs of this latest health care initiative will be much higher than official government projections indicate. That fear is well-grounded.

In their analysis of the Senate bill (S. 1052), staff with the Congressional Budget Office (CBO) estimated that the new federal mandates on the private sector would raise premiums by 4.2 percent and cost $22 billion in 2007, when the "full costs" of the legislation would "first be realized."[4] The additional costs of the new mandates for state and local governments that self-insure would amount to $4.6 billion during the first five years after enactment of the Senate bill, and state and local governments that purchase health care through private plans would have to pay premium increases of over $2 billion during the years 2002-2006.[5] For the application of "patient protection provisions" to federal care programs, as a result of the Nickles amendment, the CBO estimates an increase of $6.1 billion in "direct spending" over the 2002-2011 period.[6] Total costs, based on previous experience, could be much higher.

THE SENATE: ADOPTION OF THE NICKLES AMENDMENT

The patients' bill of rights legislation enacted by the Senate would impose new requirements on private-sector health care plans and private employers. The bill would require internal and external review procedures for patients to appeal claims denied by health plans and would amend the Employment Retirement Income Security Act of 1974 (ERISA) to permit plan enrollees to sue health insurance plans.

Under the terms of S. 1052, enrollees could sue insurers in federal court for injury or death that could be traced to their wrongful administrative decisions on claims or benefits. Enrollees could also sue in state courts, under the terms of state tort laws, for medically reviewable decisions that result in injury or death. Employers would not be subject to suit unless they "directly participated" in a plan's wrongful decision.[7] Terms of the Nickles Amendment. Senator Don Nickles (R-OK), Senate Majority Minority Whip, amended the Senate bill. Pursuant to the Nickles amendment, Title III, Section 301, provides for the application of the patient protection standards to federal health care programs.

  • Under Section 301(a)(1), "Each federal health care program shall comply with the patient protection requirements under Title I, and such requirements shall be deemed to be incorporated into this section." (Author's emphasis)
  • Under Section 301(a)(2), "Any individual who receives a health care item or service under a federal health care program shall have cause of action against the federal government under sections 502(n) and 514(d) of the Employee Retirement Income Security Act of 1974, and the provisions of such sections shall be deemed to be incorporated into this section."[8]
  • Under Section 301(a)(3), the Nickles amendment established "rules for construction" of the application of the terms of the bill, specifying that federal health care plans were to be "deemed to be a group health plan" as defined in the broader legislation; the federal government was deemed to be the "sponsor" of these plans; and any person "eligible for benefits" under a federal program would be deemed to be an enrollee in the health plan.

THE HOUSE: DELIBERATELY DESIGNED DOUBLE STANDARDS

In the House of Representatives, the unequal application of the terms of comprehensive legislation is deliberate. And it is bipartisan in spirit.

Ganske-Dingell.
In the Ganske-Dingell version of the patients' bill of rights legislation, broadly supported by House Democrats, the sponsors included a one-year GAO "study" of the issue of applying the terms of their legislation to federal health care programs before the implementation of the provisions of the bill, and further provided that the President of the United States be authorized to take necessary steps, to the extent feasible, to ensure that the "rights and privileges" afforded to patients in the private sector apply also to patients enrolled in the public sector. But, of course, GAO was not authorized to do a " study" of the impact of their legislation on private-sector plans or firms before the application of the terms and conditions of the legislation to private-sector firms and small businesses. This solemn and exclusive concern for the careful investigation of the effects of such complicated provisions on public-sector health programs is both revealing and even touching.

The Ganske-Dingell bill also included a non-binding "Sense of the Congress" resolution that government health care plans should, in principle, come under the terms and conditions of the legislation, including the new regulatory powers to be exercised by the Department of Labor and the Department of Health and Human Services (HHS), including (presumably) the arrogant and obnoxious bureaucracy previously known as HCFA, indisputably one of the worst-managed agencies of the federal government.[9] But, of course, the Ganske-Dingell legislation would in all other respects be legally binding, in exquisite detail, on a whole range of operations of private health care plans. Commenting on the House language, Stephen Barr, veteran civil service reporter for The Washington Post, simply notes, "the House bill seems to recognize that the FEHBP and other government health programs, such as Medicare and veterans health care, operate under different rules than private sector plans."[10]

The Norwood House Amendment.
The final set of amendments to the House bill (H.R. 2563), offered by Representative Charles Norwood, backed by the Bush Administration, and enacted as part of the final House version of the patients' bill of rights legislation, makes no serious change in the application of its terms and conditions to federal health care programs. Worse, the House Rules Committee did not allow for the inclusion of an amendment offered by Representative Thomas Tancredo (R-CO) in the final version of the House bill. So, in contrast to the Senate, there was not even any debate on the subject.

For the record,Representative Tancredo proposed different language to achieve the same objective as Senator Don Nickles: the full application of the patients' bill of rights to the federal government programs.

Ordinary Americans should realize that grafting a complex piece of legislation like the House or Senate versions of the patients' bill of rights legislation onto an already complicated Employee Retirement Income Security Act of 1974 will be difficult, messy, and fraught with unintended consequences. The same holds true for the application of the House or Senate provisions of that legislation to federal health care programs. There is, and should be, no ground for segregating public and private health care programs in law simply because of the inevitable administrative complexities inherent in regulating them.

DOUBLE STANDARDS: RECALLING WHAT MEMBERS OF CONGRESS SAY

Ordinary Americans might recall the righteous vehemence with which many leading Members of Congress insisted on the paramount importance of treating all Americans equally in the application of the law.[11]

In 1993, even before the insurgent Republicans seized control of the House of Representatives, the editors of The New York Times observed, "Congress is quick to impose new laws on hapless states, cities, corporations and just plain citizens. But it is woefully derelict in applying those laws to itself and its members."[12]

Editors at The New York Times and many other commentators have long noted that the support for equal application of the laws is justified beyond rendering a conventional homage to fairness. In 1993, Representatives Christopher Shays (R-CN) and Dick Swett (D-NH) wrote,

There is also a much more practical reason: Congress would write more effective and responsible legislation if it lived under the same laws it imposes on the executive branch and the private sector. By exempting themselves from some laws, Members of Congress lose the opportunity to experience firsthand the effects of the legislation they adopt. And , in turn, they remove themselves one step further from the average American , insulating themselves from the frustrations constituents face every day.[13]

Such trenchant observations have special relevance to the patients' bill of rights legislation, which calls for extensive regulation of private, employer-based insurance. As noted previously by Heritage analysts, the recently enacted House and Senate bills introduce page after page of new mandates, rules, and reporting requirements, and introduce new avenues for lawsuits and damages from which firms, including small firms, would not be exempt.

1995: Making Congressional Accountability Legal.
The issue of equity in the application of federal law fully matured with the enactment of the Congressional Accountability Act in 1995. The measure passed the House of representatives by 429 to 0. Consider the public comments of key Members of Congress during the January 4, 1995, debate in the House of Representatives:

  • Representative Greg Ganske (R-IA), a chief sponsor of the lead House version of the patients' bill of rights legislation, said at that time: "Congress should operate under the same laws everybody else does-it is only fair. But more importantly Congress will learn the practical consequences of these laws. Prior to November 8, I was a surgeon, essentially running a small business. When Congress has to deal with the same laws and regulations that small businesses do, I predict that we will modify many of the laws in a more comprehensive way."
  • Representative Steny Hoyer (D-MD), said at that time: "I cannot tell you how many times I have had business men and women, men and women from every walk of life complain that Congress passes laws and then simply exempts itself. Every one of us on this House floor has heard that criticism, which was legitimate, by our public…."
  • Representative Fred Upton (R-MI), said at that time: "It is high time that Congress starts to do what it asks everyone else to do: live under its own laws. When I walk into a restaurant in my home town in Michigan, the owners of that restaurant must abide by a litany of federal laws…. [L]et us take advantage of this special time as all America watches and send a message back home that we are willing to live under the laws we make."
  • Representative Rosa De Lauro (D-CT), said at that time: "Politicians have set an unequal standard that put them above the people. That was wrong. And, it helps to account for the growing disaffection in the country. By passing this legislation, the people are one step closer to reclaiming this body, which historically has been the peoples' House."
  • Representative John Boehner (R-OH), a major congressional participant in the House deliberations on the patients' bill of rights legislation, said at that time: "I think with the passage of this bill, that members of Congress will recognize that fact, that we are going to have to live under these [bills]. We might be a little more cautious."
  • Representative Eva Clayton (D-NC), said at that time: "We have outlived the days when Congress can expect special and different treatment from the average employer. If the Constitution means anything for anyone, equal protection of the laws must apply to everyone."

Keeping Faith with the People.
Former Representative William E. Dannemeyer (R-CA), an original champion of the Congressional Accountability Act of 1991, a version of which was finally enacted in 1995, echoed the sentiments later expressed by Representatives Shays and Swett. In his introductory speech on an earlier version of his legislation, Representative Dannemeyer said:[14]

Our Founding Fathers…would be appalled at the very notion of a congressional exemption from a law relating to civil rights or the health and safety of employees. James Madison wrote in The Federalist Papers that "Congress can make no law which will not have its full operation on themselves and their friends, as well as on the great mass of society." He understood that a government that exempts itself from the laws it imposes on others will, like King John's abusive regime, quickly lose touch with the people.

Every congressional office is, in a sense, like a small business. Members pay staff according to different pay scales; we allocate resources between our Washington and district offices differently; we purchase computer systems that are unique to our individual needs. But, because we have exempted ourselves from so many laws, we never have to face the consequences of the laws we pass.

We do not have to forgo certain material things or reduce our payroll as a result of complying with the Americans with Disabilities Act. Private sector entities must face that choice every day we do not waste valuable time locked in protracted litigation over frivolous claims brought under one of these laws. Yet that has become an expensive part of doing business in this nation. Every day businesses forego modernization or expansion because of expenses they incur under one or more of these laws. How can the Congress make intelligent decisions with respect to the impact of these rules and regulations on the private sector if we immunize ourselves from them here in Washington?

DOUBLE STANDARDS: WATCHING WHAT MEMBERS OF CONGRESS DO

Contrast these earnest congressional commitments to fairness and "good government" with the recently reported comments of an unnamed Senate aide who works for Senator Edward M. Kennedy (D-MA), a chief sponsor of S. 1052, the Senate version of the patients' bill of rights. In speaking of the Nickles amendment, applying the terms of the Senate legislation to government's health programs, including the FEHBP, the unidentified Senate aide, while acknowledging the existence of federal employee union opposition to the amendment, described the amendment as "a sideshow and a smokescreen."[15] Moreover, the same unidentified Senate aide said he didn't expect the congressional Republicans to "push hard" for the Nickles amendment when the House and Senate conferees convene on the patients' bill of rights legislation.[16]

The dismissive remarks of this anonymous Senate staffer are reflected in two very public House actions on the patients' bill of rights legislation. The legislation has come to the floor of the House of Representatives twice: in 1999 and 2001. Neither the Tancredo amendment in 2001, a House version of the Nickles amendment to the leading House bill, nor the Peterson amendment in 1999, a similar amendment during the last major House debate on the patients' bill of rights legislation,[17] was approved by the House Rules Committee for floor consideration.

Historically, leading Members of Congress have often made a subtle point, usually buried in fine statutory print, of excluding both themselves and the ever-vigilant federal workers and retirees from the terms of their own health care reform legislation.[18] As noted, powerful federal employee unions, fearful of unnecessarily high costs, are already on record in opposition to the application of either the House or Senate legislation to their own health plans.

CONCLUSION

This fall, Members of Congress will convene a major conference to resolve differences between the House and Senate versions of the complex patients' bill of rights legislation. Many of these Members and staffers say that patients' bill of rights legislation is good legislation. They say it is good for doctors and patients; it will improve the quality of health insurance; it will significantly improve the delivery of medical services in America's health care system. They say that their private-sector critics are wrong and that private-sector critics overestimate the impact of health care cost and the loss of insurance coverage.

Privately, however, at least some of Members of Congress will probably agree with federal employee union officials, as well as other residents of official Washington, that they and their colleagues should be exempt from the legislation because, as Representative Shays and Swett reported back in 1993, they either do not truly believe in an equal application of these provisions to themselves or do not think it is practical for them and their colleagues in government, including federal employees, to be burdened by the same regulatory provisions and the same higher costs entailed by imposing those provisions on the private sector.[19] They may argue that it unnecessarily complicates the federal law and exposes the federal programs to weird and unwanted results; that these protections in large measure already exist and should not be statutorily imposed; or that patient satisfaction in government health programs renders them undesirable.

Throughout the entire debate on the patients' bill of rights legislation, private-sector spokesmen, of course, have made similar arguments. In the summer of 2001, Congress dismissed those arguments.

Historically, Members of Congress have displayed a predilection for double standards, particularly in health care policy. For example, in  the treatment of Medicare and Medicaid, the big government entitlement programs, one can discern a profound difference  in approach between the Congressional passion to regulate  private health plans that contract with those huge programs and a relative lack of attention to the governance problems that beset the  programs themselves, including an explosion of incomprehensible paperwork, a growing frustration on the part of doctors and hospital officials, and a bureacratic sluggishness that threatens the efficient delivery of medical services to beneficiaries.  It is curious that, over the past several years, Congress has concentrated so much attention on the shortcomings of private health insurance plans while largely ignoring the glaring and growing managerial problems of the overly bureaucratized government health care programs for which Members of Congress  are directly responsible. On a political level, it is an extravagant exercise in selective indignation. Institutionally, it is a matter of special treatment. In either case, patients are not to be treated equally under the rule of law or regulation.

This fall, taxpayers will be treated to another civics lesson when House and Senate conferees begin to iron out their marginal differences over very similar versions of the patients' bill of rights legislation. The Nickles amendment is the big exception. On the basis of sound experience, taxpayers should pay very close attention not to what Members of Congress say, but rather to what Members of Congress do.

Robert E. Moffit, Ph.D., is Director of Domestic Policy Studies at the Heritage Foundation.


[1] The Nickles amendment was adopted on June 29, 2001, by the Senate on a voice vote and without opposition.

[2] Stephen Barr, "Morella Comes to the Defense of Whistle-Blowers," The Washington Post, July 20, 2001, p. B2.

[3] For an account of this opposition and its rationale, see Robert E. Moffit, "Why Federal Unions and Members of Congress Want to Escape the Patients' Bill of Rights," Heritage Foundation Supplement, July 23, 2001, available at http://www.heritage.org/shorts/20010723pbor.html.

[4] Congressional Budget Office Cost Estimate, S. 1052, The Bipartisan Patients' Bill of Rights, as passed by the Senate on June 29, 2001, p. 3.

[5] Ibid., p. 15.

[6] Ibid., p. 2.

[7] Under the terms of the legislation, a "designated decision maker" acting on behalf of the employer could make these health care-related decisions and thus assume liability.

[8] According to an analysis by the American Law Division of the Congressional Research Service, "While not explicit, this language could be interpreted as a waiver of sovereign immunity in both federal and state courts." This discussion of the technical issues surrounding the Nickles amendment can be found in a Congressional Research Service staff memorandum, "Analysis of the Nickles Amendment to S. 1052, The Bipartisan Patient Protection Act," July 12, 2001. The memorandum was prepared by Angie A. Welborn and Katheleen Swendiman, Legislative Attorneys in the American Law Division of the CRS.

[9] For an updated account of the managerial problems that plague the Centers for Medicare and Medicaid Services, previously known as the Health Care Financing Administration (HCFA), see U.S. General Accounting Office, Managing for Results: Federal Managers' Views on Key Management Issues Vary Widely Across Agencies, GAO-01-592, May 2001.

[10] Barr, "Morella Comes to the Defense of Whistle-Blowers."

[11] The principle of requiring Congress to submit itself to the laws it imposes on the private sector was a central element of the "Contract with America," promoted by House Republicans in the 1994 elections.

[12] Editorial, "Make Congress Obey Itself," The New York Times, April 12, 1993, p. A16.

[13] Representatives Christopher Shays and Dick Swett, "Members Should Live by Rules They Set for Constituents," Roll Call, April 29, 1993, p. 5.

[14] Representative William E. Dannemeyer, "The Congressional Accountability Act of 1991," Congressional Record, November 7, 1991.

[15] Cited in "Business Organizations Wary of Patients Rights Compromise, To lobby Against Senate Bill," in Kaiser Daily Health Policy Report, August 17, 2001, available at http://www.kaisernetwork.org/daily_reporyts/rep_hpolicy.cfm.

[16] Ibid.

[17] During the 1999 House debate on the patients' bill of rights legislation, Representative John Peterson (R-PA) offered an amendment to apply the terms of the legislation to government health programs, including the giant Medicare and Medicaid programs. The amendment was then rejected by the House Rules Committee.

[18] See, for example, Robert E. Moffit, "Congress and the Taxpayers: A Double Standard on Health Care Reform?" Heritage Foundation Issue Bulletin No. 174, April 16, 1992.

[19] As the Congressmen then revealed, "The most interesting conversations have been with the few Members who responded, ' I couldn't possibly comply with those laws-they are much too burdensome!' " Shays and Swett, "Members Should Live by Rules They Set for Constituents."

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

Related Issues: Health Care