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[Return]1999 Releases
October 1999

CONTACTS: Frank Coleman/Linda Rozett

Wednesday, October 6, 1999
Lawsuit Risk Will Savage Employer Health Care Plans, According to U.S. Chamber of Commerce Survey

WASHINGTON, 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.

So-called 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.

If Congress 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.

The Chamber 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.

Government Hypocrisy in Medicare & FEHBP Liability Exemptions

"The bitter 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 Donohue.

The United 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.

END 99-184

For a copy of the Chamber survey or Mr. Donohue’s letter

(202) 463-5682 or 888-249-NEWS

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