CONTACTS: Frank Coleman/Linda Rozett
Wednesday, October 6, 1999
Lawsuit Risk Will Savage
Employer Health Care Plans, According to U.S. Chamber of
D.C. – Faced with the threat of lawsuits if Congress enacts
legislation that expands individuals’ ability to sue their group
health plans, many employers say they will end employees’ coverage,
according to a new survey released today by the United States
Chamber of Commerce.
patients’ rights legislation pending in Congress could have
disastrous effects on businesses’ ability to provide health coverage
for employees and their families, a September survey of 769 mostly
small- to mid-sized member companies revealed.
exposes employers to increased liability, 25 percent of the
respondents that offer health coverage would terminate their health
insurance coverage entirely; 40 percent would terminate
coverage, but contribute toward an employee’s purchase of an
individual health plan; and another 27% were undecided. Few
respondents indicated a willingness to risk greater exposure to
liability – only seven percent said they would risk increased
litigation or litigation-related costs and continue to offer a group
health plan for their employees.
In a letter to
Congress, Chamber President and CEO Thomas J. Donohue warned against
legislation that undermines an employer’s ability to offer health
benefits to American workers. "Regardless of whether employers can
be shielded from lawsuits brought against health plans, the cost of
litigation and threat of substantial damage awards ultimately is
borne by the employer. Health care benefits are provided
voluntarily, and threats of more litigation, attorney fees, and
unlimited compensatory and punitive damages will simply force many
employers to drop health coverage," said Donohue.
The cost of
providing health insurance is a significant expense for U.S.
businesses. Numerous studies show that new lawsuits will only
dramatically accelerate costs. As costs rise, companies drop
coverage or require employees to contribute a larger portion of the
cost. And, as employees’ costs rise, overall participation declines,
raising the cost for those who remain.
survey shows if health care coverage costs rise up to
15 percent over one year, as most respondents expect, just over
one-fourth (27 percent) of companies offering health coverage
would consider terminating the benefit or require workers to pay
more than half the cost. If the one-year increase were 16 to
20 percent, an additional 24 percent of the companies
offering health coverage would terminate coverage or require workers
to pay more than half the cost.
Hypocrisy in Medicare & FEHBP Liability
irony of this debate is that at the same time the federal government
is emphasizing managed care as a way to manage costs for seniors
with Medicare and federal employees facing record health plan
inflation, the Congress will not impose these liability provisions
on government health plans. Is this because of the potential cost?
Or because it would threaten the continued availability of managed
care options for seniors and federal workers?" asked
States Chamber of Commerce is the world’s largest business
federation, representing more than three million businesses and
organizations of every size, sector and region.
For a copy of
the Chamber survey or Mr. Donohue’s letter