Legislation designed to help patients who
have been mistreated by their health plans is nearing final passage in
Congress, but the bill would have far-reaching unintended consequences
for employers and consumers. Studies show the "Patients' Bill of Rights"
would in fact:
- cause up to 15.4 million Americans to lose their health coverage
- expose employers who provide health care benefits to the risk of
devastatingly expensive litigation
- impose highly intrusive federal regulation on private health plans
and health care delivery.
A recent study published by The Heritage Foundation details these
risks and others, explaining that the legislation "will result in a
staggering amount of new red tape for American doctors, insurers,
employers, and patients...Congress is poised to make the problems in
America's current health care system even worse."
Health care attorney and Galen Institute trustee John Hoff details
his findings from his legal analysis of the Patients' Bill of Rights in
the Heritage paper entitled "The Patient's Bill of Rights: A
Prescription for Massive Federal Regulation" (available at http://www.heritage.org/library/backgrounder/bg1350.html).
In crafting this legislation, members of Congress are trying to give
consumers who are unhappy with their health care arrangements greater
authority to get the care they want and need from their health plans. In
movies like "As Good as It Gets" and television programs like "Law and
Order" and "ER," the villain often is a managed care company that is
denying care to sick patients. They are based upon tragic real-life
stories of people who are crippled or even die as a result of denial of
care. The political demand for action has been irresistible.
Washington has been preoccupied with this issue even while opinion
polls show a large majority of Americans would object to changes that
would drive up costs and increase the number of uninsured. Nonetheless,
Democrats believe that they picked up seats in Congress in the 1998
elections because Republicans failed to produce a "patients' rights" law
in the last session. Both the House and the Senate have passed bills,
and a House-Senate conference committee is trying to merge the two
versions into a single bill for final passage.
The most hotly debated issue, and the one that poses the biggest
threat, is whether patients should be able to sue their health plans.
The House bill gives much more sweeping authority for patients to sue
than does the Senate version.
The House bill is sponsored by Republican Charlie Norwood of Georgia,
a dentist, and Democrat John Dingell of Michigan, the Godfather of
health care regulators in the Congress. Norwood-Dingell would allow
patients almost unrestricted access to state courts and would force
health plans to provide medical care on demand. This will make health
insurance more expensive, and many employers say they would be forced to
cease providing coverage. A Harris Interactive Study says that if the
bill is enacted, 15.4 million people could be added to the ranks of the
44 million who currently are uninsured.
The bill will make the health sector the target of billions of
dollars in lawsuits by trial lawyers who even under current law are
organizing a blizzard of lawsuits. Even without the new legislation,
lawyers are taking action against managed care companies they claim put
profits over patient care. A group of lawyers filed a class action suit
in Mississippi and Pennsylvania last year against Aetna. The suit
potentially representing 18 million Americans charges misrepresentation,
fraud, and extortion to "systematically limit, delay, or deny medical
care to its members." A similar suit was filed the same week in Florida
against Humana.
The new wave of litigation could bankrupt health plans and divert
billions of dollars from health care to lawsuits.
What is wrong with this picture? Why do consumers need an act of
Congress to make the market more responsive? This is America!
People are used to getting what they want, when they want it, for the
price they are willing to pay.
But not in the health sector. People are rightfully unhappy with
health care arrangements that throw up roadblocks to medical care that
they need when they are most vulnerable. But the solution is not to
create a bureaucratic maze of impossibly complex legislation that will
tie up patients, health plans, and employers in court for months, if not
years. Instead, we should have a system in which people can choose
health plans that suit their needs, health plans that they have
purchased directly or through groups negotiating in their best interest.
Of course people should be able to sue their health plans, but
a lawsuit should be their last resort. First, they should be able to
vote with their feet and pick a plan that is catering to their needs .
Then, if they are denied the care, they could take their health plans to
court for breech of contract, just as they would under any other
contract arrangements.
Why can't they do that now? Because they don't own their health
insurance policies and therefore have little recourse in either the
marketplace or in the courts.
Most Americans receive their health insurance as a benefit through
their jobs. But that means that the employer, not the employee, owns the
health insurance policy. Employers decide which health plans employees
will get and they negotiate the terms. As employers have sought to rein
in costs over this last decade, more and more of them have sought health
plans that would "manage" the health care of their employees. But more
and more employees see "management" as "denial" and "restriction," and
they are rightfully unhappy.
Employees are limited to the health plan, or plans, their employer
offers. If they don't like the coverage, they can go without (as a
growing number are doing) or try to purchase health insurance in the
private market. The clincher: If they buy their own health insurance,
most will have to use after-tax dollars. This can make a policy several
thousand dollars more expensive than the one their employer offers if
they can find one to buy at all.
The culprit lies in an obscure provision in the tax code that dates
back to World War II which ties health insurance to the workplace for
most Americans. Workers can get health insurance as tax-free
compensation only if their employer writes the check for the premiums.
This tax provision drives many of the problems in the health sector and
is directly responsible for the loss of control that rightly infuriates
so many American workers.
If Norwood-Dingell or anything like it becomes law, it will be the
third major piece of left-leaning health care legislation to pass
Congress since the failure of Clinton Care in 1994. When President
Clinton said he would enact his plan little by little, he wasn't
kidding. He threatens to veto any patient protect legislation that is
"watered down."
Hope that he does. The legislation being considering in the nation's
capital is not only unnecessary, it is actively harmful. A federal
"patients' rights" law would disrupt the more careful work being done by
state governments to open up access to the state courts to citizens to
sue. Further, several courts have been cracking the door to the Employee
Retirement Income Security Act to allow suits against health plans by
patients who were denied care in "federally qualified" plans.
Doctors have lobbied hard for the patient protection legislation and
are celebrating their victory, but they are naοve to think that
more regulation by government which is exactly what this
legislation does is going to solve their problems.
There is a simple dictum that explains the dilemma: Whoever
controls the money controls the choices. If it is employers, they
will select take-it-or-leave-it health plans. If it is government, it
will create tens of thousands of pages of regulation to govern the
spending of every penny.
The only long-term solution is for people to select and own their own
health insurance. They can choose policies that best suit them and their
families at a price they are willing to pay, just as they do every day
in purchasing life, home, and car insurance. Health plans and insurance
companies will be forced by competition to respond to the demands of
their customers for quality, affordable coverage.
There are a number of initiatives currently being considered in
Congress that would assist consumers in obtaining their own private
health insurance by directing the tax break to individuals rather than
through their employers. House Majority Leader Dick Armey, Republican of
Texas, and Democrat Pete Stark of California are among those who have
introduced legislation that would provide tax credits to the uninsured
to purchase private health insurance. Both believe that something must
be done to help the 44 million Americans without coverage. Further,
providing tax credits to even a targeted number of the uninsured would
begin to revitalize the fragile and shrinking market for private health
insurance.
The only real cure will be a health care system in which people make
their own decisions about the health coverage they want, coverage that
they can take with them if they move, change jobs, retire, or start
their own businesses. Providing tax credits for the purchase of private
health insurance is a giant step in the right direction toward a
responsive free market for health insurance one in which health care
dollars are going to medical care, not lawsuits.
Grace-Marie Arnett is president of the Galen
Institute, a public policy research organization based in Alexandria,
Virginia. She is the editor of Empowering Health Care Consumers
through Tax Reform, published in 1999 by the University of Michigan
Press.