Press Release April 27, 1998	Contact: (202) 462-6262 Adrienne Mitchem, mitcad@consumer.org Kathleen McShea, mcshka@consumer.org Consumers Union Washington, D.C. Office

Consumers Union Asserts that Managed Care Industry's Concern about Health Care Affordability Is Disingenuous

WASHINGTON -- Following is a statement from Adrienne Mitchem, legislative counsel, for the Washington, D.C. office of Consumers Union, Publisher of Consumer Reports, in response to a study released today by the American Association of Health Plans and employer groups examining the cost associated with liability provisions included in managed care legislation:

While we have not seen the study financed by the American Association of Health Plans, we are skeptical about their cost projections. These are the health plans that are expected to increase their premiums about 10 percent next year, hardly making health insurance more affordable for low and middle income households.* AAHP's new found concern about health care affordability appears to be a self-interested attempt to deny consumers the right to hold health care plans accountable for egregious mistakes that cause severe injury or death.

Congress needs to end the sweetheart deal that the managed care industry enjoys today and begin holding plans accountable for negligent behavior. Unless the managed care system is held accountable for its actions it will continue to have a financial incentive to put profits ahead of quality care.

Compensatory damages act as an important counter-balance to the financial incentive to under-treat which plague the current health care market. In fact, the effectiveness of other reforms would be seriously diluted if managed care remains immunized from responsibility for egregious behavior that causes injury or death.

No other industry is left off the hook like this. Why should a managed care company get off scot-free when a bean-counter overrules a physician on what is medically necessary care, with harmful results? After suffering an injury due to someone else's medical negligence, only the justice system has the power to make you whole.

Restoring quality patient care to managed care requires a resurgence of rational decision making. The rule of reason is bolstered by reforms that provide plans with financial incentives not to skimp on the quality of care to cut costs. Liability for negligent or egregious behavior provides such an incentive.

* Milt Freudenheim, "Health Insurers Seek Big Increases in Their Premiums", New York Times, April 24, 1994