My my. I will admit to being very impressed with the slick commercials being aired by Dr. Woody Meyers. Especially his evident commitment to a national health care system. I'll admit that I have been wondering about his willingness to spend nearly a million and half of his own dollars to get elected--that's a lot of money for a self-described public health physician.

Then I got an anonymous email from someone claiming to be a regular reader of my columns, with the suggestion that I look at Dr. Meyers' 1999 testimony AGAINST the Patients Bill of Rights. So I looked into it (ain't google grand!), and sure enough, it seems Dr. Myers worked with the Republicans to defeat the (Democratic) bill.

The Federal News Service, February 24th, has the complete text of Dr. Myers' testimony. Note his expressed beliefs that medical care is best "left to the free market" and that costs are best contained by limiting the right of patients to sue:

Mr. Chairman, members of the Committee, I am Dr. Woodrow Myers, Director of Healthcare Management for Ford Motor Company. In this position, I am responsible for all aspects of Ford's healthcare programs, including occupational health & safety, worker's compensation, and health benefits for employees, retirees and dependents around the world.
In the U.S. alone, Ford provides quality healthcare coverage for about 640,000 employees, retirees, and dependents, located in all 50 states. In 1998, Ford's total cost, including the FAS 106 (Financial Accounting Standard)liability, was about $2 billion.

I am appearing before you today on behalf of the Association of Private Pension and Welfare Plans (APPWP-The Benefits Association), a national trade association of companies concerned about the employee benefits system. APPWP's members include Fortune 500 companies and other organizations that provide benefit services to employees. Collectively, APPWP's members either sponsor or administer health and retirement plans covering more than 100 million Americans.

I appreciate the opportunity to provide Ford's perspective on the critical role ERISA (Employee Retirement Income Security Act of 1974) plays in our efforts to provide high quality and comprehensive healthcare benefits, even as we face significant and ongoing cost pressures in the highly competitive global automotive industry. In healthcare, as in manufacturing, Ford believes the objectives of controlling costs and improving quality are not mutually exclusive. We want to ensure that our employees have access to the best healthcare available and that we are getting superior value for the money we are spending. ERISA plays an important role in achieving that objective.

To give you a sense of how competitive the auto industry is, I'd like to briefly turn your attention to the supply of new autos. A recent issue of "The Economist" reported that "... the (auto) industry will by 2000 have the capacity to produce about 22m(illion) more vehicles than the world wants. In other words, every car plant in America could close ..." and the rest of the world would still have more than sufficient capacity to meet North America's needs (The Economist, May 10, 1997, pg. 13).

Naturally, in this environment, controlling all of our operating costs is critical to success. Our success in this marketplace, and we will be successful, will result in excellent returns to our shareholders, secure jobs - including benefits - for our employees, and significant returns to local communities and the entire nation. Failure results in reduced benefits, lost jobs, and increased numbers of uninsured.

The Importance of ERISA

In a voluntary healthcare market, ERISA has provided a sound and effective regulatory framework that balances the needs of employees, retired employees, and their spouses and dependents with the responsibilities of employers. Uniform federal regulations have enabled thousands of employers to provide employee benefit programs offering coverage that otherwise would not be available.

As the sponsor of a health benefit plan, our role is to administer the plan and pay for healthcare coverage. In our health benefit programs, the actual care is delivered by the providers and health plans with whom we contract. And, while we evaluate these plans and providers to ensure that we offer only quality health plans, we do not make medical decisions or deliver healthcare services. (We do, however, provide on- site occupational clinical services at most of our 179 manufacturing facilities around the world.)

We believe maintaining ERISA preemption of state regulation and mandates is essential to offering uniform healthcare benefits to our employees across the country. For Ford, federal regulation in lieu of individual state regulation has allowed us to work with the UAW and our employees to offer uniform healthcare benefits regardless of where an employee is located. In this capacity, ERISA has been integral to our efforts to contain healthcare costs and to design nationally uniform benefit plans tailored in the best interests of all our employees' needs.

At Ford, we believe the Federal Government should seek ways to encourage broader healthcare coverage. Clearly, without the protections ERISA preemption provides, both the cost of insurance and the number of people without insurance would increase significantly.

Ford Efforts

Several years ago, Ford Motor Company decided to approach its healthcare challenges with a better idea. We began to merge the units related to healthcare scattered throughout the company into Ford Healthcare Management, including health benefits, safety, occupational health, worker's compensation and disability benefits. This organization structure allows us to look at the totality of healthcare issues at Ford in a comprehensive manner. Furthermore, Ford began to take a more scientific, quality-oriented approach to healthcare issues, rather than one based solely on cost containment.

As my biography indicates, I am a physician with significant public health experience. My medical background is in internal medicine, with a specialty in critical care medicine. My public health background is based in my professional experience as Commissioner of Health for the City of New York, and Health Commissioner for the State of Indiana. This background has given me an unshakable commitment to healthcare quality, both in care that is provided to the individual patient and to populations of patients, and an appreciation of the importance of the "public trust" in the medical profession.

My job is to ensure access to the best health benefits possible for our employees, retirees and their dependents. Fundamentally, we are committed to measuring and improving the health of this population, by evaluating the quality of care they receive from hospitals, physicians and health plans and by contracting with the best providers we possibly can.
We view the "health" of our people as an asset of the Corporation, one that must be measured and protected - and never compromised. Ford Healthcare Management and our healthcare providers are the custodians of that asset. When optimized we believe it provides us with a competitive advantage, and it allows our employees and their families to maximize the enjoyment of their work and their lives. As a plan sponsor and payer, our long-term goal is to reward our providers based on positive performance.

We envision a day when health plans will compete with each other based on their ability to improve health status and to optimize health outcomes, instead of on the depth of their provider discounts. We envision risk adjustment measures that will facilitate meaningful comparisons and eliminate the "my patients are sicker" defensive strategy.

In our view, market-based strategies are the best way to remedy health system defects. The market will reward the efficient, high-quality providers and punish those who do not measure up. Those strategies begin with easily-available, comparative information on healthcare quality.

At Ford we have several quality initiatives presently underway:
First, we use several methods to closely evaluate the quality of care provided by individual providers, hospitals and health plans to Ford employees, retirees and their dependents, including:

- requiring all Ford offered health maintenance organizations (HMOs) to be certified by the National Committee for Quality Assessment (NCQA), and
- significantly increasing efforts in measuring and reporting the quality of services through comparing patient satisfaction among individual hospitals and health plans, and comparing hospital performance in terms of quality and cost for specific diseases.
Second, we are undertaking an aggressive employee education campaign, with the help of best-in-class healthcare research and policy organizations (e.g. Harvard Medical School, the Picker Institute, RAND, etc.). We believe that educating our health plan members is a crucial element in Ford's goal of optimizing the health status of our employees. We are using a variety of methods, including written, video and online communications, to reach out to employees.

Third, with the UAW, we are engaged in a major effort to improve healthcare delivery systems in specific communities. This includes specific initiatives on issues such as asthma, diabetes and heart disease, as well as efforts to improve the care delivered by local providers.
Fourth, we continuously communicate our expectations to our major healthcare suppliers. Through conferences and individual meetings, we have met with the senior leadership of virtually all of Ford's healthcare suppliers and major providers (hospitals and physicians) to convey the importance of optimizing quality while eliminating inappropriate costs.
Finally, our most aggressive and innovative strategy to date is the creation of the Ford Healthcare Quality Consortium. The Consortium is a partnership between Ford Healthcare Management, its key suppliers and leaders in healthcare, as well as health services research. The Consortium will conduct a variety of initiatives and studies aimed at directly improving the quality of healthcare delivered to our members and improving their health status.
Ford also expects the health plans with which it contracts to make timely coverage decisions by qualified personnel, when pre- authorization of medical services is required. In the case of benefit denial in a managed care plan, the avenue of appeal is back to the health plan's own internal review process. Ford, in cooperation with the UAW, reviews the adequacy of the internal review processes employed by all the plans with which we contract. Ford's traditional, self-insured plan, has its own appeals process which we developed with the administrator. If the beneficiary is still not satisfied, they can appeal to Ford. On experimental treatment decisions, we employ an external review by an expert panel.

At Ford Motor Company we are mobilizing our resources in these and other ways to improve the health of our employees, retirees and dependents, to reduce inappropriate services, and when necessary, inappropriate denial of coverage. I can assure you that at Ford, Healthcare Quality is Job 1.

Our concerns about proposed changes to ERISA

Over the past several years, there have been several proposals to modify ERISA that concern not just Ford, but most, if not all, employers. Employers have a strong fiduciary responsibility in developing and administering their plans. We are very concerned about any erosion of the protection ERISA presently provides employers and health plans with regards to claims. Employers and health plans have to make critical coverage decisions on a regular basis. ERISA allows us to do this effectively. ERISA also provides an avenue to Federal courts for review of claims disputes, while shielding employers from excessive and unpredictable damage awards in state courts. Without these protections, we believe many employers will find the litigation exposure too threatening to provide healthcare coverage and would reduce current commitments.

Removing the ERISA preemption of state suits regarding claims denials or changing the legal framework provided under ERISA will only serve to increase the cost of coverage, without a corresponding increase in the quality of care. Increased litigation is simply not an efficient method of ensuring quality care. In fact, the most comprehensive analysis of medical malpractice, the "Harvard Medical Practice Study" found that less than half of the settlements paid to the small portion of successful litigants ended up in the hands of those who suffered injury.

Another critical protection ERISA affords is from state regulation and mandates. Their effects, directly and indirectly, on health plans can be most clearly viewed in two recent General Accounting Office (GAO) studies:

First, a study entitled "Health Insurance Regulation: Varying State Requirements Affect Cost of Insurance", surveyed studies of the cost of mandated benefits. The survey found a range of cost estimates for mandated benefits from 22% of total claims cost in Maryland - the state with the highest number of mandated benefits - to 5% of total claims cost in Iowa, a state with few mandated benefits. These wide differences in mandated benefits dramatically complicates the administration of healthcare plans. Additionally, mandates add significantly to the cost of health coverage.

A second GAO study, entitled "Private Health Insurance, Continued Erosion of Coverage Linked to Cost Pressures," found that the decline in private employer-based coverage between 1980 and 1995 was due in large part to the rising costs of insurance. Despite a strong economy and employment growth, GAO found private health insurance steadily declined during the period for the under-age 65 population, from 79.5% to 70.5%. Over the same period the number of uninsured increased from 11.8% in 1980 to 17.3% over 40 million people in 1995. The GAO report stated "A major reason for declining private health coverage is the rising cost of insurance."

Our objective should be to enhance and ensure high quality care at the point of delivery, as opposed to awarding financial penalties, after the fact, through litigation. We are convinced that much more can be achieved when purchasers hold plans accountable, and use strong, credible internal and external review processes. It is important to remember, however, that any review process, particularly external, is highly labor intensive, requiring intense scrutiny and exhaustive review of case histories. Care should be taken to ensure external reviews are undertaken only for cases that meet specific criteria, such as life threatening or other key threshold issues.We firmly believe tough measurable quality standards - not legal disputes - are the most effective means of holding health plans accountable for the care they provide.
As you understand so well, good healthcare coverage is one of the most valued benefits of employment. There can be little doubt, however, that broadening the basis for litigation is sure to increase already high healthcare costs. The recent court decision in California awarding $116 million in punitive damages is a troubling glimpse of the financial threat employers and their health plans would face if they are exposed to state suits due to elimination of ERISA preemption. While we prefer to talk about our quality efforts, we cannot ignore the cost of healthcare. As I mentioned earlier, Ford's U.S. healthcare costs were about $2 billion in 1998. Although cost increases have moderated in recent years, most analysts predict healthcare premiums wirease sharply in the future. According to published reports, the average premium for the federal employee health benefit plan will increase 10.2% this year. Unfortunately, we also have strong evidence indicating a return to double-digit rates of increase in healthcare costs. In fact, our pharmacy benefit costs rose about 30% from 1996 to 1998. In our business, where pricing flexibility is limited, and in some cases, non-existent, we cannot absorb such cost increases but have to find offsets.

Conclusion

In conclusion, I would like to thank the Committee for allowing me to testify on this critical issue. I want to close with my concern that undermining ERISA, particularly in a voluntary health system, could limit innovation and the ability of employers to tailor benefit packages to meet the needs of their employees, add administrative complexity and cost, and could lead some employers to reduce benefits (increasing premiums, copays and deductibles) or drop health coverage altogether. The importance of maintaining the integrity of ERISA is even more critical in light of the apparent return to double-digit rates of increase in healthcare costs.
I am proud of the work we are doing at Ford. I firmly believe that the health of our employees and their families is improving and will continue to improve. But, I believe equally strongly that continued improvement depends upon our ability to seek out the healthcare providers who deliver the highest quality care at the most efficient price.

Sheila Suess Kennedy's blog | login or register to post comments