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March 21, 2000
The Scope of Managed Care Reform 
We are now 10 days away from the first deadline for the House-Senate Conference Committee to produce a final version managed care reform bill. 

The three critical issues for a successful bill  - scope of coverage, liability, and the definition of medical necessity - have still not yet been determined. 

Many supporters of this effort are concerned as to whether the process can move forward in conference in light of this lack of progress on the major issues. 

Members of the House and Senate have speculated that passage of a final bill depends on the support of the House Republicans who voted for the House bill under consideration. 

As the co-author of that bill, I feel an obligation to help speed the process of compromise, by offering a remedy to what appears to be a major holdup in negotiations – the issue of scope. 

As you know, the Senate bill extends full protections to only the 56 million Americans in self-insured ERISA plans.  The bill I wrote with Mr. Dingell extends protections to all 169 million people in private-sector health plans, as a basic floor of standards, to which the states can add what they like. 

I still vastly prefer the position of the House bill.  All Americans would know they have certain basic rights in dealing with their health plan, regardless of where they live, or how their employer chooses to finance their coverage.   This is why over 300 medical and patients groups, 68 House Republicans, the President, and my co-author Mr. Dingell are so firmly behind this concept. 

The Senate argues that the 113 million people outside ERISA self-insured plans are already covered by state level protections, and therefore don’t need any federal remedy. 

We disagree because in countless cases, these protections have been blocked by ERISA’s preemption clause. 

However, if these Americans were truly governed under state level protections, the Senate would have a legitimate point in not wanting to interfere in state health policy. 

So today I offer a compromise solution on this issue of scope.  If the conference will include an  amendment which clarifies that ERISA preemption of state law applies only to Americans in self-insured plans with an adequate definition of self-insurance, I believe we will have a bill that can pass. 

This amendment would accomplish only that which the Senate says is already the case – that the 76 million Americans in non-self-insured ERISA plans are fully subject to state law.   ERISA preemption would not apply to these plans in any shape, form, or fashion.  Based on the Senate’s position, they should have no objections whatsoever to this proposal.
I would vote for this compromise if it were included in the final bill submitted to the House, and I would encourage my colleagues on both sides of the aisle to do the same. 

I still prefer the approach in the original Consensus bill.  But if we could, within the next four weeks, clear up the 25-year old legal vagaries surrounding ERISA preemption, and ensure that all Americans could access patient protections through either federal or state law, we ought to take that opportunity immediately as a reasonable, and responsible compromise. 

If the Senate refuses, we will have a loud and clear answer that ERISA does indeed preempt state law for all ERISA beneficiaries, and we will know that there can be no retreat from our original House bill. 

I am today submitting to members of the conference draft legislative language for this amendment that was developed in support of the Texas Patient Protection Act of 1997.   That state-level bill is very similar to our House bill, and is currently under challenge in 5th U.S. Circuit Court over this very issue of ERISA preemption, with the insurance industry arguing that the law should not apply to ERISA plans.  This language was originally written as an amendment to a Senate bill, but can be easily adopted by the Conference. 

A solution to the scope issue is now available, in line with the position of the Senate, and I believe ultimately agreeable to the majority of House supporters of the Consensus bill. 

With this proposal, there is no good reason an agreement on scope could not be reached this week, leaving only liability and medical necessity to be determined by next Friday’s deadline. 

Thank you, and I will be happy to answer any questions. 


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