DESPERATELY SEEKING Health Care Reform.

Last year's Congressional debate on managed health care reform was tumultuous, and we can expect to see more of the same in the upcoming Congress. On one hand, patients' rights advocates understand the debate to be about protecting a patient's ability to sue managed care companies for inferior-quality medical services. On the other hand, employers believe the debate centers on their ability to provide health care benefits to employees/patients without exposing themselves to onerous financial liability and skyrocketing benefit expenses.

The explanation for these two differing philosophical approaches to health care policy lies in the esoteric and arcane federal ERISA laws. Passed almost 30 years ago, the Employee Retirement Income Security Act (ERISA) allows for the preemption of state laws regarding health care and pension plans. The ERISA state preemption authority allows health care providers to minimize their liability costs and, thereby, keep the cost of health care benefits at a manageable level.

During the 106th Congress, high-profile health care legislation, H.R. 2900, was introduced by Reps. Charles Norwood (R-Ga.) and John Dingell (D-Mich.). It would have gutted ERISA laws and allowed employees/patients to sue managed care providers and, in some instances, employers, in state courts.

In response, employers ratcheted up their lobbying efforts to block any health care proposal that included "anti-ERISA" provisions. If ERISA were lost, employers would be left with only a few options: reduce the benefits packages currently provided; pass the resulting increase in health care costs to the employee; or discontinue health care benefits because they are too costly.

Unfortunately, patients' rights advocates and members of the medical community do not share this view of health care reform. Their belief is that everyone should be able to choose and receive any kind of care they want, without restrictions.

This unfettered approach to health care, as proposed in H.R. 2900, would have imposed a huge financial burden on employers. While the position of unlimited and guaranteed choice has merit, the economic reality is that health care costs continue to rise annually, driven by sharp increases in prescription drug costs. Add to that the possibility of losing ERISA preemption protection, and employers simply will not be able to afford to provide health care benefits for their employees.

While this debate was raging in the House, the Senate had its own health care legislation, S. 1344, sponsored by Sen. Don Nickles (R-Okla.). This legislation provided for a patients' bill of rights in a similar manner as HR. 2900 but without dismantling ERISA. By early summer last year both the House and Senate passed their own versions of health care reform. However, because the Senate bill did not do away with ERISA state preemption laws, but the House legislation did, it was impossible to combine the two versions for President Clinton's signature.

With the inability to reach a consensus on the House and Senate legislation, along with the lack of time, an unusual lame duck session last fall and an undecided presidential election, Congressional policymakers hung up their gloves and gave up on achieving managed care reform during the 106th Congress. Senior staff members in the House and Senate are predicting that health care will be a top-priority issue this year and should pick up steam near the end of 2001, once the new administration has gotten a few victories under its belt. Watch this debate closely, because it will most assuredly affect your company's bottom line.

Grace Hinchman is FEI's senior vice president for public affairs.