Speeches by Secretary Elaine L. Chao

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Secretary of Labor Elaine L. Chao
American Association of Health Plans (AAHP)
February 27, 2002

Thank you, Anthony, and thank you all so much for having me here today.

I'm so pleased to be here representing the Labor Department and the Bush administration… and I hope you know how very much we appreciate the fine work of AAHP and its members.

You truly are leaders in the ongoing effort to contain costs while ensuring high quality in America's health-care marketplace.

That's what managed care is all about, and that's what you are all about. Your success in finding that delicate balance is commendable.

I want to focus my remarks today on our mutual desire to achieve quality while at the same time controlling costs and increasing access to health care. The government and the benefits community face different challenges as we strive for that same goal, but my hope is that we will work together to achieve the most value for patients.

I want you to know, first, that I do understand how challenging it is for you to strike the quality/cost balance in your industry - especially during these economically challenging times. There are many significant factors that drive up the cost of health-care coverage - factors that are out of your control. A recent Kaiser Family Foundation study cited increases in costs for prescription drugs, providers and medical technology as significant contributors to the double-digit medical inflation we face today.

As if those factors are not enough on their own, the enormous cost driver of state and federal regulation is a weight that increases every year. Layered atop one another, these regulations risk choking the life out of affordable, accessible health care coverage.

Anyone who doesn't believe that layering of state and federal regulation has a stifling effect only has to look for evidence in the individual coverage market. Between HIPAA and the state rate regulation, the individual market is in precarious shape.

All of us are concerned about the layering of regulations. President Bush and I know what a burden it is; we know that it ends up costing the consumer, and that means weighing down the scales on that sensitive balance of quality and affordability.

Again, these realities of cost increases and the burden on the consumer are why the Bush administration appreciates so much what managed care health plans have done to make health coverage affordable for so many people.

As you know, the President has urged Congress to bring a patients' bill of rights to his desk. His priorities were clear when he pointed out, in his State of the Union address, that "Americans know economic security can vanish in an instant without health security."

The President has asked Congress for a bill that has comprehensive, common-sense patient protections - like the ability to use the closest emergency room to a patients' home and easier access to specialists.

He has also asked that patients have the right to a prompt review by an impartial panel of doctors if a health plan denies coverage for care.

He sees the value of uniform federal standards and has made it very clear that this bill should serve the interests of patients, not the interests of trial lawyers.

And that's something I know we can all agree on.

The negative effect that lawsuit abuse has had on the health care industry - speaking of cost-drivers! - and the temptation for the trial bar to make it into an ever greater cash cow… is upsetting to all of us.

So the President will not accept a patients' bill of rights that allows for limitless liability, but he will sign a bill that is mindful of the balance between quality for patients and rising health care costs.

He wants to achieve the maximum value for individuals.

Speaking of finding a balance… I want to let you all know how hard we are working at the Department of Labor to achieve a balance on implementation of the new benefit claims regulation that was published at the tail end of the Clinton administration.

As you know, the Labor Department's Pension and Welfare Benefits Administration released guidelines in December to help benefit plans with this new regulation.

That guidance, we hope, will make compliance less burdensome on the benefit community while maintaining the regulation's important protections for workers and their families.

I know that, because of things like the claims regulation, ERISA and HIPAA enforcement, the U.S. Department of Labor may not always feel like a friend to America's health plans.

That said, I do want to let you know that the approach of the Labor Department has changed over the fourteen months. It is no longer one of a "gotcha" mentality.

The Bush Labor Department does not take joy in enforcing ERISA and HIPAA. We simply take it seriously.

We also take very seriously the importance of increased compliance assistance at the Department of Labor. The more successful our efforts on the compliance assistance front, the fewer enforcement actions will be necessary.

I am very pleased to report that we have a very successful partnership with state insurance commissioners. Together we are working to reach employers at the grassroots level on COBRA and HIPAA regulations.

And, of course, our own PWBA regional offices participate in compliance assistance in addition to its enforcement duties.

PWBA is, by the way, currently investigating a number of abusive MEWAs. With the onset of recession, we have seen an increase in fraudulent behavior. Patients have been harmed.

And we will vigorously protect consumers from fraudulent and abusive MEWAs.

I know that many of you are concerned that the creation of Association Health Plans - something the President strongly supports - will lead to abuses similar to what we have seen with some MEWAs.

I want to reassure you that the Association Health Plan provisions included in the version of the Patients Bill of Rights passed by the House has strong provisions to protect against abuse. Additionally, the bill protects against adverse risk selection and includes safeguards to prevent destabilization of the private market.

President Bush recently noted, when announcing his health-care agenda, that: "We face a huge challenge of making sure that we're still the world's greatest health care system…"

And then he asked, "How do we maintain our edge? How to we make sure the American people get the best care in the world?"

We all want desperately to come up with the right solutions to those challenges.

I know that you share the president's pride in the excellence of our country's health care… and that you also share his commitment to maintaining and increasing that high quality while also increasing access to coverage and care for all Americans.

And I know that you are striving, every day, to achieve the dual objectives of quality and affordability. You responded to your primary customers - America's employers and workers - need for both quality and affordability when you developed managed care. You are critical to the continued success of the private health care system in our country.

Please know that those of us in the Administration are committed to achieving the dual objectives of quality and affordability. And we understand how our actions can make your job harder if they are not well thought out.

Like you, we are dedicated to increasing the number of Americans who have private health insurance.

We believe one of the ways to increase health coverage is through the expansion of Medical Savings Accounts, the creation of Association Health Plans and Health Tax Credits for those who are most in need.

We are also committed to helping those who fall between the cracks. A great concern of mine, for example, is ensuring that displaced workers have a way to maintain their health-care coverage while searching for a new job.

We are in this struggle together, ladies and gentlemen.

At the end of the day, I know that you and I want the same things. We want as many Americans as possible to have health insurance coverage. We want them to be satisfied with that coverage.

And I believe that, together, we will achieve those goals.

Thank you so much, again, for having me here. It is a pleasure to have this time with all of you.

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