Bill of Rights
THE TWO PLANS
A Congressional Budget Office (CBO) analysis indicated
that the median annual health insurance premium would increase 2.9
percent under a Health Maintenance Organization (HMO) reform bill
by Frist-Breaux and supported by the Bush administration. In comparison,
a rival plan by Senators Edward Kennedy (D-Massachusetts) and John
McCain (Republican-Arizona) would increase annual premiums by 4.2
When necessary medical treatment is denied the
Frist bull would allow patients to sue health plans. However, it caps
damages at $500,000 and limits suits to federal courts. The caps would
keep insurers from increasing rates say supporters.
The McCain-Kennedy plan to allow suits in state
and federal courts and awards of up to $5 million is the focus of
the Democrats. Because of the new rights patients would get, supporters
of this measure say any premium increase is a small price to pay.
UNINSURED RATE WILL INCREASE
Eighty percent of the health insurance to employees
are provided by the nation's employer's but they are worried that
they will be drawn into a web of lawsuits by a patients rights legislation.(2)
The National Federation of Independent Business
said on June 18, 2001, "The Congressional Budget Office estimates
the Kennedy-McCain bill would increase costs 4.2 percent, which translates
into 1.2 million more American's without health insurance." (3)
The small business lobby said, "And that doesn't
even count employers who will stop providing insurance because they
fear lawsuits over coverage decisions they don't control." (4)
For each one percent increase in the cost of insurance,
300,000 Americans will lose coverage indicates the Health Insurance
Association of America. (5)
By 2010 the managed care reform bills currently
being debated in Congress could cause an additional 9.2 million Americans
to lose their health care insurance according to a new analysis by
the Employment Policy Foundation. (EPF). (6)
Annually, about 56,000 new lawsuits would be filed
with a cost burden to employers and health care plans of $7.9 billion
to $16.3 billion estimates EPF. From the new lawsuits, attorneys could
receive at least $1.4 billion to $2.8 billion annually.
Currently, managed care or HMO plans cover more
than 88 million people in the United States (U.S.). However, 17.2
percent of the population or 47.1 million people did not have any
form of health insurance in 2000 according to the Bureau of Labor
Statistics Current Population Survey. (7)
Health Plan Ratings
Often based on ratings by people who say they
are in HMO's are claims that health maintenance organizations (HMO's)
give poorer quality care than other types of managed care or traditional
About 25 percent of people in private-sector health
plans, however, incorrectly identify whether or not they were in an
HMO according to a study from the Center for Studying Health System
Change (HSC). In general, people's perception of the quality of caare
they receive was negatively affected by their belief even if they
were not actualy in an HMO because of the negative view of HMO's.
Using a number of quality indicator, 60,000 privately
insured individuals were asked to rate their health care in a survey
used by researchers. From health insurers, the responses were checked
against follow-up data. For about 6,000 individuals, a definitive
match to a specific insurance product was made.
HSC researchers found when comparing the data,
11 percent of the individuals in other types of plans incorrectly
thought they were in an HMO, and 13 percent who were in an HMO incorrectly
thought they were in another plan type.
Compared to those who believe they were covered
by other types of insurance companies who thought they were in HMO's
rated their plan lower on most measures by modest margins. In rating
those who actually were in HMO's and those who actually were in other
kinds of insurance plans, researchers found that there were virtually
no differences in ratings.
When HMO's exercise medical judgment about the
necessity of a proposed treatment, they are currently subject to malpractice
laws and may be sued in state court because of a 2000 Supreme Court
ruling in Pentagon v.s. Hendrick. Still exempt from state action are
disputes about a health plan contract. However, in federal court,
these cases patients may bring suit.
As demands of the market and evolving case law
have decreased, public dissatisfaction has started to subside for
the Patient's Bill of Rights.
Compared to a similar survey three years ago,
Americans report far fewer problems with their health plans on every
standard. For example, complaints have declined by more than 40 percent
in some cases.
Protecting patient's rights are ranked at the
bottom of the list although most people think health issues are "very
important" for Congress and the President.
If it means premiums were increased by $20 a month,
support declined to 60 percent from 85 percent that initially said
they favored the Patient's Bill of Rights. When asked if "it meant
that some companies might cease offering health plans to their workers"
only 41 percent continued to support it, and 47 percent opposed it.
Is the Patient's Bill of Rights Really Necessary
When HMO's exercise medical judgment about the
necessity of approved treatment, they are subject to malpractice laws
and may be sued in state court. However, lawmakers are still prompting
the Patient's Bill of Rights and the idea that one cannot sue their
HMO as a result of a federal law called ERISSA.
In April, Sharon J. Arkin, a spokeswoman for the
American Trial Lawyers Association, testified before Congress, "The
courts have carved out an exception and help that malpractice claim's
against an HMO are not pre-empted by ERISSA." (8)
HMO's are being sued as if indicated in "Mealey's
Managed Care Liability Report," a legal newsletter devoted solely
to these suits. Also, a regular column, "HMO Lawsuit Watch," that
takes a half dozen new suits every issue is included in the industry
publication "Managed Care Week." Multi-million dollar damages sometimes
result from these individual suits. Well-financed medical societies
sometimes bring class action suits. Suing HMO's is a growing industry.
HMO's have backed off some of the more troublesome
practices in part because of the litigation explosion. "Gatekeepers"
or "capitated" or "captated" payments to physicians are no longer
relied on by HMO's. Pre-admission certification requirements and utilization
reviews are being dropped. They have ceased being HMO's at all, moving
instead to becoming "point-of-service" plans or "preferred" provider
organizations, in many cases.
"Right now, we is moving back to letting medical
professionals decide what is necessary with little or no budget constraints,"
said Brander's University professor and former Clinton advisor Stuart
Altman (9). One of the factors driving up health care costs again
is the removal of "budget constraints." Premiums are increasing again
at three or four times the overall cost of living after several years
of premium increases lower than the rate of inflation. Rate hikes
as high as 30 percent are being given by small employers.
Rising costs have not alarmed most Americans because
many Americans rely on employers, insurers, or the government to pay
for their health insurance. As a result, consumers are not sensitive
to the costs of their treatment decisions, and this is the real issue
that is not being addressed in health care.
The President said he will fight proposals that
open the door to unnecessary lawsuits against HMO's but urged Congress
on June 20, 2001, to pass a patients' rights bill before the end of
He said, "The idea is to serve more patients not
create more lawsuits in America." (10)
An alternative to a Democratic health care proposal
sponsored by Senators John Breaux (Democrat-Louisiana) and Bill Frost,
(Republican-Tennessee) and James Jeffords, an independent from Vermont
was praised by the President.
However, many small business owners are still
worried about the legislation.
Philip Tredway, the owner of an Erie, Pennsylvania
plastic company that has 55 employees says, "I don't want to stop
offering benefits." (11) But, he worries if the Democratic bill
becomes law, he'll have to deal with out-of-control costs and the
potential that his company will be hit with a business-killing lawsuit.
A slate of guarantees for patients, including
emergency care, access to obstetricians and gynecologists and payment
for costs associated with clinical trials would be provided by the
Also, either federal or state courts would let
patients sue insurance for a range of damages, including punitive
ones, in the Democratic bill.
Employers could easily be caught in the net of
lawsuits under the change being considered said Paul Paynet, a lobbyist
for the American Benefits Council, which handles benefit issues for
Fortune 500 companies. (12)
For example, if employees tell an insurer to follow
certain medical standards when deciding which treatment to cover,
they could be liable for "exercise of control" said Dennett. He added,
the employer could be liable for dictating the standards in the first
place if a patient is injured because the health plan followed those
Dennett said, "They continue to insist employers
have no liability when they actually do." (13)
What Does America Need
A health care system that gives Americans greater
control of their health plans and choice is what is needed not a patients'
bill of rights that provides attorneys lifetime employment. What is
needed is a universal coverage in a system that is based on market
competition and personal choice. The most effective and versatile
tool to achieve this goal would be to implement a universal tax credit
and easier access to new forms of coverage. This credit would allow
those happy with their current employer-sponsored coverage to keep
it but would provide neutrality between employer-based coverage and
coverage obtained in other ways.
(1) Anjetta McQueen, "Analysis: Bush HMO Plan
Would Be Less," The Associated Press, June 8, 2001
(2) Anjetta McQueen, "Patients' Rights Bill Worry Employers," The Associated
Press, June 20, 2001
(3) Donald Lambro, "Patients' rights bill stalls
in Senate," The Washington Times, June 19, 2001
(5) "Patients' Rights Legislation: The Triangle
of Health Insurance: Quality, Cost and Access," Policy Backgrounder,
June 20, 2001, Employment Policy Foundation
(7) EPF tabulation of data from the Current Population
Survey. March Annual Demographic and Income Supplements
(8) Greg Scandlen, "Patient's Rights' Misses Today's
Issues," New York Post, June 16, 2001
(10) Anjetta McQueen, "Bush Wants Patients' Rights
Bill," The Associated Press, June 20, 2001