“People get ready…there's a train a-comin'”

Abstract

Most working Americans and their families receive their health insurance benefits through their employers. For decades, the cost of these benefits has increased at a rate substantially higher than the general rate of inflation, and the burden has fallen on corporate America. Companies, of course, pass on these added costs to consumers in the price of goods and services. Eventually, the crunch came as corporate America increasingly had to compete in a world economy against foreign industries that had a lesser health care burden. The most striking example was the automobile industry; health care had become one of the most expensive “parts” of every American vehicle.7The spiraling cost of American health care was fueled by the structure and incentives of traditional Blue Cross/Blue Shield indemnity health insurance. Because patients did not pay their own costs they had no incentive to limit their consumption of health care; providers, paid on a fee for service basis, could always earn more by providing more. As medical technology exploded, the range of health services kept expanding. Corporate America ended up paying the bills in a system that seemed to have no restraints.35 Efforts to shift rising premium costs onto employees or to cut back covered benefits typically met organized resistance.33Ironically, corporate America's assumption of responsibility for the cost of health care is a matter of traditional expectations, not the result of a federal mandate. The federal Employee Retirement Income Security Act (ERISA)14 regulates health benefits, but it does not require employers to offer particular benefits or indeed any benefits at all. The premise of Congress was that health benefits would be a voluntary matter to be negotiated between employers and employees. ERISA was meant to secure the benefits negotiated between management and labor but not to tilt the playing field and give either side an edge. Toward this end, the federal statute contained provisions barring interventions by state legislatures and state courts that might alter the balance of power.But in the decade of the 1980s, the playing field of management and labor began to tilt for economic and political reasons. A lean and mean corporate America, supported by a Republican administration, began to look for business-like solutions to the fiscal burden of soaring health benefit costs. Managed care would be the answer: It forced medical providers to pay attention to the bottom line even if that meant lowering standards of care, and it eliminated fee-for-service incentives. ERISA, as it turned out, would allow all this to happen without risk of liability.35The law of ERISA, as it relates to health benefits, presents an array of technical legal rules and distinctions that test the comprehension of seasoned attorneys. And, as of this writing, there are several bills pending in Congress to amend the impact of ERISA on malpractice liability, such as the Managed Care Plan Accountability Act of 1997 and the Patient Access to Responsible Care Act of 1997. No attempt can be made here to describe the portents of change or to dissect all of these legal details. What follows is an overview of what seem to be the crucial issues that have had an impact on the nature and quality of care that patients receive from physicians, psychiatrists, and mental health practitioners. Elsewhere, the author has described the market forces that have changed the structure of American health care.35The importance of ERISA cannot really be understood separate from those market forces. Here the emphasis is on how ERISA insulates health plans from the legal consequences of restricting care. The key issues in the discussion that follows include: •ERISA does not mandate health benefits.•ERISA does not mandate particular health benefits.•States cannot require ERISA self-insured plans to cover particular benefits.•ERISA was premised on indemnity insurance with retrospective utilization review. Beneficiaries can be compensated for the value of care wrongly denied.•ERISA provides no remedy for beneficiaries harmed by prospective denial of benefits.•ERISA usually preempts state claims for damages.•Preemption is based on two provisions of ERISA. Section 502 described complete preemption, and Section 514 described conflict preemption.•Section 502, complete preemption, can remove the plaintiff from state court, and Section 514, conflict preemption, can negate state claims in federal court.•ERISA does not protect doctors or hospitals that actually provide care from liability.•ERISA, unless amended, insulates from liability mental health professionals who make benefit determinations even when they depart from accepted standards of care.•There are now more than 4963 federal and state cases on ERISA preemption. Therefore, all of the preceding and what follows must be considered less than authoritative.