In California, It's `Hell No, Hmo!'

A protest against managed care's excesses gains momentum

Barbara J. Roberts died five years ago. And her daughter, Linda Ross, isn't about to let Kaiser Permanente--the nation's largest HMO--forget it. Roberts waited more than four hours in a Kaiser emergency room before a doctor diagnosed the blood clot in her lungs. Then the doctor chose not to administer an expensive anticlotting drug, an arbitration panel found. Roberts, 61, died two hours later while awaiting more tests.

Kaiser concedes mistakes were made, but says they "did not contribute to [Roberts'] death." Nonetheless, Ross won a $150,000 award last year against the HMO in arbitration. And she isn't stopping there. She has collected 2,500 signatures for one of two statewide ballot initiatives that would impose strict regulations on HMOs. Ross says she's working to change a system that rewards doctors who limit treatment. "My mother was relegated to the trash heap," she says. "It's all about money."

Ross is just one in an army of patients, doctors, and nurses who have turned up the heat on HMOs in California, the cradle of the managed-care industry. On Apr. 23, sponsors of competing versions of the California Patient Protection Act together filed 1.5 million signatures with the state, virtually assuring both initiatives a spot on the fall ballot. Either measure would impose sweeping restrictions (table). "We're sending a message to HMOs: If you want to reap huge need to follow some basic rules," says Rose Ann DeMoro, executive director of the California Nurses Assn.

That message resonates around the country. Mostly in the past six months, at least 30 states have passed a range of laws regulating HMO activity. Many measures ban so-called gag rules that limit what doctors can tell patients about HMO policies, or require insurers to share financial data with consumers. Other states have mandated minimum two-day hospital stays for maternity patients. Virginia, Arkansas, and Louisiana now require HMOs to pay for any emergency room visit that a "prudent" person would consider urgent.

But the California initiatives would go much further. The more controversial version, backed by DeMoro's nurses group and Ralph Nader, contains provisions that would impose a 2.5% tax on HMO executives whose total compensation exceeds $2 million in any year, and would levy fees on industry mergers to help finance public health care. The alternative initiative, sponsored by the California Physicians Alliance and several unions, would bar HMOs from terminating physicians based on the amount they spend for treatment.

It's too early to tell whether the initiatives have enough support to win passage; some worry that the more extreme nurses' measure will only divide the vote. But their mere existence is jarring in a state where managed care has prospered for decades virtually unchecked, thanks to intensive lobbying and a business community eager to rein in spiraling health-care costs.

FIGHTING BACK. Now, the political climate is shifting. The state Corporations Dept. is fighting to impose its first penalty against an HMO, a $500,000 fine on FHP International Inc. for denying cancer treatment. And the Medical Board of California, made up mostly of appointees of probusiness Governor Pete Wilson, has responded to HMO criticism by warning in its April report of "alarmingly frequent" instances of HMOs "restricting medically necessary services."

The HMO industry dismisses both ballot initiatives as union-backed efforts to preserve health-care jobs. They have enlisted the California Chamber of Commerce, which holds that regulating HMOs would be bad for the state's business climate, raising premiums for employers. They also have retained Goddard-Claussen/First Tuesday, the slick ad shop that helped deep-six President Clinton's health-reform package with its Harry & Louise ads. "We are taking these initiatives very seriously, and we're going to fight back," says Leonard D. Schaeffer, chief executive of WellPoint Health Networks Inc.

But the public mood is clearly turning against HMOs. For the industry, it's an ominous, defining moment. California gave birth to managed care 30 years ago. Now, Linda Ross and millions of others are ready to lead the counter-movement that reins the business in.

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