THE WHITE HOUSE

Office of the Press Secretary

STATEMENT BY DEE DEE MYERS

The following documentation is in response to Elizabeth McCaughey's article entitled "No Exit: What The Clinton Plan Will Do For You", that ran in last weeks New Republic.

The article contains numerous factual inaccuracies and misleading statements.

This documentation clarifies the facts surrounding the President's approach to health care reform.

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ANALYSIS OF THE NEW REPUBLIC ARTICLE

ARTICLE:     "The bill guarantees you a package of medical 
             services but you can't have them unless they are 
             deemed `necessary and appropriate.'"

FACT: This is very misleading. Today, insurers can decide that procedures, treatments, etc., are inappropriate or unnecessary. No insurance plan guarantees you the right to unnecessary or inappropriate care. To imply that such decisions are made only by doctors and individuals today is deliberately misleading, at best. Under reform, most such decisions will be made by patients and their doctors. In fact, the Health Security Act gives consumers more guidance and more rights about what is necessary and appropriate.

In addition, the Act does not, as the statement implies, forbid a plan from delivering services -- even if it does consider them not necessary or inappropriate. It says they may do so. And under the Act you have clear means of immediate appeal should you feel you deserve different or additional care -- a guarantee that rarely exists today.

Most importantly, the bill (page 15-16) specifically states that "Nothing in this Act shall be construed as prohibiting the following: (1) An individual from purchasing any health care services." There is nothing in the Act to prohibit any individual from going to any doctor and paying, with their own funds, for any service. There are also no restrictions on the purchase of supplemental insurance.

ARTICLE:     "That decision (whether or not care is necessary or 
             appropriate) will be made by the government, not by 
             you or your doctor."

FACT: Untrue. If anything, the "necessary and appropriate" care provision in the bill delegates authority to the medical profession -- rather than imposing further government bureaucracy between the patient and the doctor. For most people today, their insurance company, not their doctor, has final authority over what is necessary, appropriate and therefore reimbursable. Today, insurers can decide that procedures, treatments, etc., are inappropriate or unnecessary. No insurance plan guarantees you the right to unnecessary or inappropriate care.

Michael Kinsley criticized this article, saying: "It is pointless to compare the Clinton plan with some idealized version of the classic American system, in which you can go to any doctor you want, who can perform any treatment he wants, order any test she wants, prescribe any drug he wants, and charge whatever she wants, all paid for by insurance." ["Health Care Nonsense", The Washington Post, 1/27/94]

Under reform, most such decisions will be made by patients and their doctors. The National Board has the authority to issue guidelines relating to what is necessary and appropriate. The authority to issue these guidelines does not infer that there are no options left to physicians and patients, only that a benefits package guaranteed to all Americans must be consistently defined across states.

Guidelines that are developed by the Board will be developed in an open hearings process in which all interested parties can have input. Regulations used by insurance companies today are developed by the companies as those companies see fit.

ARTICLE:     "Escaping the system and paying out-of-pocket to see 
             a specialist for the tests and treatment you think 
             you need will be almost impossible."

FACT: That is wrong. Under the Act, you can pay "out-of- pocket" for anything you want at any time, to any physician or hospital willing to treat you.

However, we should stress that, under reform, it is very unlikely that individuals will have to pay for such treatment. Every plan, even the most structured HMO, must offer at the very least a point-of-service option which enables you to go see a physician of your choice at any time. In some plans you may have to pay somewhat more to do this, but it is always an option, unlike today and unlike the alternative plan (Cooper) endorsed by The New Republic.

ARTICLE:     "If you walk into a doctor's office and ask for 
             treatment for an illness you must show proof that 
             you are enrolled in one of the health plans offered 
             by the government. The doctor can be paid only by 
             the plan, not by you."

FACT: False. You do not have to be enrolled in a plan to be treated. If you go to a doctor and are not enrolled in a plan, the doctor will treat you. You will then be given information on available plans and you may choose any plan you want. The plan you choose then pays the physician. The purpose of this provision is to assist all individuals in enrolling in a plan.

However, as noted above, an individual may pay any doctor any price for any service outside the comprehensive package of services offered as part of a plan. So if an individual wants to go to a doctor and pay the doctor they can.

ARTICLE:     "The bill requires the doctor to report your visit 
             to a national data bank containing the medical 
             histories of all Americans."

FACT: Not true. The very first provision of this section of the Act states: "The information system must be consistent with privacy security standards in the Act." Physicians may be required to submit data on outcomes, treatments, etc. for the purpose of improving quality and assessing treatments and outcomes. But the Act very specifically prevents against tying this data to specific individuals.

Sections 5101 and 5102 spell out detailed protections that assure that patient records and individual health data are strictly protected. Therefore, the implication that an individual's medical records will be in a national data bank and that those records can be accessed by all kinds of other agencies, individuals, etc., is patently untrue.

ARTICLE:     If you work for a company with fewer than 5000 
             workers you "must enroll in one of the limited 
             number of health plans offered by the regional 
             alliance where you live."

FACT: Misleading. These individuals choose a health plan from the regional alliance bargaining on their behalf. But it is clearly misleading to assume there will be a "limited" number of plans offered by the alliances. In contrast, the alliance is obliged to offer all plans certified by the state, including at least one traditional "fee-for-service" plan. The only exception is that an alliance may decide not to offer a plan than charges 120% or more of the average premium cost in the region.

For example, one of the real world models of an alliance -- the California Public Employees Retirement System -- offers its members a choice of 24 different plans and individuals choose a personal physician in the plan. And more than two-thirds of the members are so satisfied with their plan that they would recommend it to a friend. This is a big difference from today's system in which the great majority of Americans face a very limited choice of health plans. About 50% of Americans insured through their employer have only one or two options of health plans. The great majority of Americans will have more choice in the alliance system.

ARTICLE:     "Under the bill, a National Health Board . . . will 
             decide how much the nation can spend on health care 
             beginning in 1996."

FACT: This is untrue. The Health Security Act makes no attempt to "decide how much the nation can spend on health care" and specifically rejected the idea of global budgets or arbitrary price controls. The National Board is only authorized to set the initial premium targets -- the rates at which health insurance premiums (for the comprehensive benefits package) not national health expenditures may increase from year to year. These premium targets are important guarantee to American taxpayers and businesses who are being asked to contribute to their health care that their premiums will not continue to spiral out of control, as they have done for years. There are no restrictions in the Act on the amount of money that may be spent by people with their own funds for additional services or supplemental insurance policies.

ARTICLE:     "The bill outlaws plans that would cause a region to 
             exceed its budget or that cost 20 percent more than 
             the average plan."

FACT: Wrong again. No plan is "outlawed." The premium limit does not preclude any plan from participating. The alliance has the option (not the requirement) to refuse to contract with a plan charging more than 20% over the average premium (so that people have a safeguard against insurance company price inflation).

ARTICLE:     "Even the bill's authors anticipate that restricting 
             the dollars available for health care in the teeth 
             of these trends will produce grave shortages; the 
             bill provides that when medical needs outpace the 
             budget and premium money runs low, state governments 
             and insurers must make `automatic, mandatory, 
             nondiscretionary' reductions in payments to doctors 
             nurses and hospitals to assure that expenditures 
             will not exceed budget."

FACT: This is misleading. The author here is clearly implying that such a mechanism exists in the main proposal -- it does not. The section the author is quoting from here refers to states that choose to form single payer systems, not from the description of the primary system advocated in the plan. Virtually all single payer systems work in this manner, adjusting payments to providers to make certain budgets are met.

Even with regard to single payer systems, there is absolutely no indication in the plan that the bill's authors are anticipating "grave shortages." This is responsible legislation; the plan merely spells out, in this special case, the mechanism by which a single payer system would meet targets if expenditures were running ahead of anticipated costs. To spell out such a mechanism is hardly an admission that "grave shortages" are expected.

ARTICLE:     "Above a threshold level of quality, alliance 
             officials will approve health plans based on lowest 
             cost, not highest quality."

FACT: Not true. In contrast, the alliance is obliged to offer all plans certified by the state, including at least one traditional "fee-for-service" plan. The only exception is that an alliance may decide not to offer a plan than charges 120% or more of the average premium cost in the region. They are not required to do this however.

ARTICLE:     "What most of us call fee-for-service (choose your 
             own doctor) will be difficult to buy."

FACT: That is wrong. To the contrary, the Health Security Act preserves fee-for-service arrangements by requiring all alliances to offer at least one fee- for-service plan. Today, more and more Americans cannot choose a fee for service plan because their employers have chosen not to offer that option. Recent reports have shown that ". . . a growing number of employers have abandoned traditional indemnity [fee-for-service] plans entirely. In fact, more employers now offer managed care plans than offer traditional indemnity plans." In fact, in 1988 , 89% of employers offered fee-for-service plans but, by 1993, this number had dropped to 65%. ["1992 Health Care Benefits Survey", Foster Higgins, 1992; "Health Benefits in 1993", KPMG Peat Marwick]

ARTICLE:     "Price controls on doctors' fees and other 
             regulations will push doctors.." 

FACT: That is wrong. There are no price controls in the President's plan. Price controls -- calling for government micro-management of every health care service, doctor's fee, drug technology, and product -- were considered and specifically rejected. The Health Security Act does have -- as a backup mechanism for cost control -- a limit on how much insurance premiums can increase every year. This is an important guarantee. If employers are to be told they have the responsibility to contribute to coverage -- and if the federal government is going to provide discounts to small businesses and low- income individuals -- then American businesses and families deserve the guarantee that their premiums, and government spending, won't continue to rise unchecked.

Since, the federal government won't make market decisions on specific prices; health plans will have to decide themselves how to become more efficient in a way that won't drive consumers to another plan. As Stephen Zuckerman and Jack Hadley, two leading health policy analysts, wrote in support of the plan's premium limits, "it seems far preferable that insurance companies that are responsible to their subscribers make these decisions than having the federal government involved in detailed price negotiations and review procedures with individual hospitals and physicians." ["Clinton's Cost Controls Can Work", Washington Post, 11/7/93]

ARTICLE:     "The bill limits what health plans can pay 
             physicians and prohibits patients from paying their 
             doctors directly."

FACT: False. Any health plan that pays physicians according to their own contracts may pay those physicians anything they like. The bill only tells most health plans what to pay physicians with whom it has no contract. These fees apply to fee-for- service plans and for charges when individuals go out of the plans' network of doctors.

It is not clear why a patient would want to pay a doctor "directly," for services that their insurance company is obligated to pay. If the implication is that individuals cannot go to any doctor and pay for whatever they want, that is false. Their right to do so is expressly protected.

ARTICLE:     "The Clinton bill calls utilization review a 
             `reasonable restriction' on patient care and 
             expressly includes it as a requirement for doctors 
             treating patients with fee for service insurance as 
             well."

FACT: That is wrong. The plan does not "require" fee for service insurers to use utilization review. It says they may do so. The purpose is to define what fee for service insurers -- who have no contracts with the physicians they are paying -- may do in assessing charges. Utilization review is one option they are expressly permitted, not required, to do.

In reality, the bill is just following common practice here, acknowledging the typical practice of utilization review in fee for service plans. If the author is implying that many Americans are enrolled in plans where there is no review by the insurer, she is being deliberately misleading. As Michael Kinsley said, "It so happens that the New Republic's own health care plan (of which I am a member) has extensive `utilization review.' . . . Utilization review is one of the developments rapidly spreading - - for good or ill -- under our current health care system. It is one reason health cost inflation has abated so dramatically . . ." ["Health Care Nonsense", The Washington Post, 1/27/94]

ARTICLE:     "Some states recently have enacted laws to safeguard 
             choices patients want to make for themselves, such 
             as which hospital or pharmacy to use.  HMOs protest 
             that these laws hobble cost containment, and the 
             Clinton administration apparently agrees. The 
             Clinton bill pre-empts state laws protecting patient 
             choice." 

FACT: Deliberately inaccurate. The Act guarantees all individuals full choice by giving everyone the option many don't have today -- access to a fee for service plan in which they can choose any provider. The Act also mandates that all HMO's and other managed care plans offer a point-of-service option in which individuals have a right to see any doctor outside of their plan or its network. This, again, is far greater choice than many individuals have today. In fact, current trends are towards declining numbers of individuals in fee for service plans and therefore fewer choice of doctors.

Most of the relevant laws that are being "pre- empted" are not geared to protecting patient choice -- which is fully protected and expanded in the Act -- but to protect providers from price competition and other pressures of managed care organizations. The state laws the Act overrides are those that bar managed care organizations from creating their own networks -- for example, not allowing a managed care network to refuse to admit a qualified physician into its network.

ARTICLE:     "Doctors in training will be assigned to the coveted 
             specialty programs based partially on race and 
             ethnicity...."

FACT: This is ridiculous. No physician or medical student is "assigned" to any specialty or told what type of medicine they can practice. The Act does make clear that funding of medical education will put more emphasis on the widely-acknowledged need to train primary, as opposed to specialty care physicians, and that attention will be paid to the potential under-representation of minority groups.

ARTICLE:     "Under the Clinton bill you are entitled to a 
             package of basic benefits, but you can have them 
             only when the are `medically necessary' and 
             `appropriate.'  That decision will be made by the 
             National Quality Management Council, not be you or 
             your doctor.  The Council ... will establish 
             `practice guidelines' to control `utilization' of 
             health services."

FACT: That is wrong. You and your doctor will decide the type of care that you need. The National Board has the authority to issue guidelines on what may be necessary or appropriate. Its process of issuing any guidelines will entail the fullest participation of all concerned.

Today, virtually all insurance plans can refuse to pay for services deemed unnecessary and inappropriate, and it is the insurance company -- not the patient and physician -- with the ultimate authority. The decision- making process of insurers are not subject to any public input or scrutiny. To imply that the new system will have restrictions on what is necessary and appropriate, when the current system does not, is anything but truthful.

There is nothing in the Act to suggest that the "practice guidelines" referred to here will be mandatory or will control anything. They are to assist plans, providers and others in providing higher quality care. As the Act says, they "may be used by health care providers to assist in determining how diseases, disorders, and other health conditions can most effectively and appropriately by prevented, diagnosed, treated and managed clinically."

ARTICLE:     "The Secretary of Health and Human Services has the 
             power to set a controlled price for every new drug, 
             and to require the drug manufacturer to pay a rebate 
             to the federal government . . . If a producer balks 
             at paying the rebate, the Secretary can `blacklist' 
             the drug, striking it from the list of medications 
             eligible for Medicare reimbursement."     

FACT: Very misleading. The word "blacklist," with quotation marks around it in the statement, does not appear in the bill. Putting quotation marks around it implies it is directly lifted from the text. In this case, however, it obviously applies to the author's interpretation of the text.

The Secretary can, in some circumstances, request a rebate on a drug as a cost containment tool. This will apply only to those drugs purchased in bulk by the federal government for the millions of Medicare beneficiaries. Manufacturers are given process rights in these negotiations as well. There is no "blacklist".

ARTICLE:     "Under the bill, the Secretary weighs the 
             development costs and profit margin for the single 
             new drug, rather than the overall profitability of 
             investing in new cures."

FACT: The statement refers to page 373 of the bill. The bottom of that page and the next page list no less than 8 factors that must be considered by the Secretary in negotiating a rebate in the Medicare drug program. Clearly, there is no effort to exclude the consideration that many efforts to produce new drugs cost a great deal and produce no profit to drug manufacturers. Drug companies would certainly be given the opportunity to raise these considerations and there is absolutely nothing in the proposal would prevent the Secretary from considering that reality.