National Partnership: Patients' Bill of Rights Act

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TALKING POINTS: RESPONSE TO CONCERN THAT
THE PATIENTS’ BILL OF RIGHTS WILL RAISE COSTS AND
INCREASE THE NUMBER OF THE UNINSURED

Only independent estimates have any value.

Whenever there is a dispute about social policy, the opposing sides engage consultants to cook up estimates to support their point of view. These estimates typically bear little relationship to reality. For example, the U.S. Chamber of Commerce claimed that Family and Medical Leave would cost businesses $27 billion annually, but the GAO found that actual costs would be only 2% of the Chamber’s claims. When the Kassebaum-Kennedy insurance reform legislation was being considered, the HIAA said that premiums would increase by 22% and might go up as much as 31%. The American Academy of Actuaries and the Congress Research Service said the increase would be minimal--less than 2% per year spread over a three-year period.

All independent estimates show little cost impact from the Patients’ Bill of Rights.

There have been only four unbiased, independent estimates of the cost of the Patients’ Bill of Rights. The Lewin Group estimated the costs of the President’s Commission proposal, which largely parallels the Patients’ Bill of Rights; the accounting firm of Coopers and Lybrand estimated the cost of the Commission’s proposal for the Kaiser Family Foundation and separately estimated the cost of the liability provisions of the Patients’ Bill of Rights, and the Congressional Budget Office made an official estimate of the Patients’ Bill of Rights. All of these estimates showed a very small cost impact:

The highest cost impact came from the Congressional Budget Office, which estimated that it would take ten years before the legislation added 4.8% to overall premiums. (CBO estimate dated June 16, 1999) For a typical worker, a one percent premium increase in one year would be $20 – less than $2 per month – split between the employer and the employee.

The bulk of the cost would come from necessary medical services provided to patients, not from the cost of litigation or bureaucratic requirements. The additional costs attributable to the Patients’ Bill of Rights are dwarfed by projected increases in premiums from other sources.

There is no evidence that the Patients’ Bill of Rights will add significantly to the number of the uninsured.

Opponents cite figures claiming that every one percent increase in premiums results in an increase of 400,000 in the number of the uninsured. This estimate came from a firm hired by the opponents of the bill and was based on a CBO statement that CBO itself says was taken out of context and is not applicable to this legislation. The firm has since lowered its own estimate of the impact of premium increases. The GAO analyzed this issue and concluded that "recent studies call into question the basis for the . . . estimate." The GAO pointed out that the estimate was based on the idea that fewer firms would offer coverage, yet the number of workers offered coverage actually increased between 1988 and 1996, while premiums increased 8% a year.

The GAO concluded: "Because many factors can affect the number of individuals covered by private insurance, it is difficult to predict the impact of an increase in insurance premiums. For example, new mandates may increase premiums but may also change individuals’ willingness to purchase insurance. Individuals may not mind paying higher premiums if they like the changes brought about by the mandates."¹

The cheapest insurance is coverage that never pays benefits when people get sick. All plans should be required to deliver the care they have promised.

updated 7/9/99

^1.GAO, Impact of Insurance Premuim Increases, GAO/HEHS-98-203R, July, 1998.