It is estimated that 60% to 70% of American people who have health insurance have a plan which falls under the provisions of the Employee Retirement Insurance Security Act of 1974 (ERISA). ERISA was designed to protect and enhance pensions and benefits for employees of nationwide companies, and was heavily lobbied for by business as more and more employers established facilities in multiple states.
Companies found that as they tried to develop retirement and pension plans for their employees, they had to deal with 50 different sets of state rules. Labor unions supported ERISA because of the difficulty of negotiating multistate contracts and conforming to 50 different sets of labor laws. ERISA solved this problem for labor and business by preempting all of the state laws concerning retirement and pensions, and replacing them with a single, simplified set of federal regulations for those employers who operate across state lines.
As it was originally fashioned, ERISA was not intended to address health care benefits, but in a session after the bill had been passed and was going to the conference committee, the committee members decided to include health benefit provisions. This means that all of the health regulations concerning ERISA-covered health insurance plans in all 50 states are preempted. They have no effect on ERISA plans. There is no appeal process, and further, ERISA also preempts medical malpractice law. Because medical malpractice is a tort, it can only be heard in state courts; since there is no provision in federal law for medical malpractice to be heard, individuals covered by ERISA-run plans are unable to sue for medical malpractice.
On April 23, 1997, Rep. Charlie Norwood (R-Ga.) introduced the Patient Access to Responsible Care Act (PARCA), H.R. 1415 and S. 644. PARCA is designed to provide a number of things for physicians as well as consumers. Perhaps key are consumers' ability to sue health insurance plans that cause injury or death through denial or restriction of care; and the ability to appeal the decisions of their health insurance plan, both with officials from the plan and with outside arbitration if necessary.
Under PARCA, physicians will no longer be bound by gag clauses in contracts and must be provided reasonable notice if they are to be dropped from participation in a plan, and allowed to appeal the decision. All doctors and hospitals must have the freedom to apply to enter a health plan contract, and insurance companies must develop standardized qualifications for determining participation.
The Norwood bill is broader than most other managed care proposals, and has generated concern among managed care companies and firms that are self-insured. Lobbyists for the insurance industry released an actuarial analysis on the cost of implementing PARCA. According to the report, PARCA would increase costs for health insurance by 7% to 9%. The report estimated an increase in premiums based on a mandatory point-of-service option. PARCA calls for employees currently offered only a closed network plan to be given the choice of a point-of-service plan, and the employee would pay the additional fair market value for the plan if they choose to enroll.
