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Employers may have to drop health care plans to avoid liability

Legislation worries businesses

Doctors like it. Employers don’t. Opponents of the Patients’ Bill of Rights, on the fast track since Democrats took control of the U.S. Senate last month, say the fallout from its passage could result in more employees losing health insurance.

“The risk is that many employers, who are providing health care benefits now, will say, ‘we’ll fund benefit dollars to employees, but they have to get health care coverage on their own’,” said Blake Wilson, president of the Mississippi Economic Council. “It will make it very difficult for employees, and just one step away from nationalized health care. And that’s not good for anybody.”

On June 29, the Senate overwhelmingly passed the Bipartisan Patient Protection Act of 2001, dubbed the Patients’ Bill of Rights. According to an independent panel, implementation of the bill, which awaits House action, would increase health care costs by at least 2.9%. U.S. Sen. Edward Kennedy (D-Mass) first introduced legislation in 1996.

In a last minute compromise with Republicans, Democrats added a provision limiting employers’ exposure to lawsuits, requiring patients to fully exhaust review board appeals before heading to court, capping lawyers’ fees at one-third of a patients’ awards in court and giving states the right to retain their own patient protections if they are substantially compliant with new federal regulations.

But President George W. Bush and Republicans have expressed concern that the new rules would open the floodgates for lawsuits, driving up costs and sending many Americans into the pools of the uninsured.

Moments after the Senate vote, Bush said, “the Senate failed…to address the danger that excessive, unlimited litigation in state courts would drive up premium costs and cause many American families to lose their health coverage. I could not in good conscience sign the bill, because it puts the interests of trial lawyers before the interests of patients.”

Democratic compromises to the proposed legislation are “only being done to add language to make it palatable enough so the president won’t be embarrassed to sign the bill,” said Dan Hughes, president of the Mississippi Healthcare Insurance Services Corp., which runs a nonprofit employer-sponsored ERISA (Employee Income Retirement Security Act of 1972) program.

“The bill specifically says that if an employer gets involved in the medical process, he’s responsible for the outcome,” he said. “All employees have to do is show that the employer had some influence on where they went for health care. Everybody has a recommended physicians list. We’re digging a crevice that will be difficult to dig out of.”

The Patients’ Bill of Rights applies primarily to Americans who have private health insurance through employers and would not improve access to health care coverage for 44 million uninsured Americans.

Nearly 70% of insured workers and their families are enrolled in volunteer employer sponsored group plans, Hughes said.

“These programs would be absolutely doomed,” he said. “What Congress is doing, and where the doctors have been successful in blaming the insurance companies and providers, is by combining the moral, ethical and emotional side of health care to violate that contract.”

Hughes said giving health care dollars to employees in lieu of providing an employer health care plan won’t help.

“People can’t buy their own health insurance unless they are well and have no pre-existing conditions,” he said. “Then insurers can pick and chose who they cover. The reason you have group programs in the first place is to blend the people who are not so well with those that are in good health and then come up with a plan where everybody is insurable.”

Many employers have told Hughes that “if they become exposed for the medical outcome, then they will no longer buy insurance for their employees. Just the threat of one lawsuit could force them into bankruptcy.”

“If Blue Cross thinks they can make themselves immune to it somehow, they’re fooling themselves,” Hughes said. “They’ll be gone, too. It doesn’t take too many $100 million lawsuits to make it unprofitable.”

Chris Clarke, vice president of customer and corporate communications for Blue Cross & Blue Shield of Mississippi, which writes about 32% of the health insurance business in Mississippi, said the insurance company supports patients’ rights.

“In fact, our products carry many of the same rights to access that this bill proposes, such as direct access to an OB/GYN, emergency care access and access to specialists,” he said. “We also support a swift and fair appeals process when disputes over claims arise.”

“We do, however, have some concerns about the liability provisions in this bill as it is currently drafted. We wouldn’t want this well-intended legislation to ultimately do more harm than good to our country’s health care system,” Clarke said.

Even though the proposed legislation was designed with HMOs in mind, the bill passed by the Senate will affect all health plans including fully-insured, self-funded and governmental plans such as Medicare, Medicaid and the Federal Employee Health Plan. It will also affect health plan administrators and third-party payers, Clarke said.

“While the costs of the bill’s liability provisions have yet to be determined, history tells us that as liability expands, costs go up,” he said. “Our concern is that some employers may not be able to carry the additional risk or the higher cost of group insurance. In short, the cost of coverage could end up out their reach. The effect would be two-fold: higher costs and a higher population of uninsured. This is a very complicated piece of legislation — and while its intentions are with the public’s best interests in mind, everyone needs to understand the potential consequences as well.”

Bill Roberts, executive director of the Mississippi State Medical Association, said organized medicine has long supported passage of the Patients’ Bill of Rights.

“We don’t think employers ought to have widespread exposure to lawsuits as a result of this bill, and to the extent they can limit it, we’d support that,” Roberts said. “On the other hand, if they are making decisions that do decide whether or not a person is going to receive health care benefits for a particular service that they’re otherwise entitled to, if it’s a covered benefit under their health plan and the employer is involved in making a determination of a covered service benefit, then who’s to say they shouldn’t have some liability for that?”

Tim Thomas, administrator for Newton County Hospital, which until June 1 provided its employees with health care coverage through a self-funded plan, said the proposed legislation hits the hospital from both sides.

“We just switched back to an indemnity plan, where someone else is paid to take the risk, because we couldn’t get reinsurance on our self-funded plan,” he said.

At the same time, doctors are asking to have their malpractice limits increased, Thomas said.

“We’ve always been under a $1-million/$3-million policy, and now they want a $5-million/$10-million policy,” he said. “It’s a tremendous increase and it’s because Mississippi has put itself in a predicament with people wanting to come here to try cases. That’s only going to increase with HMOs if this bill is passed.”

Clinton M. Guenther, president of the Mississippi Defense Lawyers Association, said, “If it opens the door to yet more lawsuits in this country, then it is a real shame.”

“The root of the
is a desire for money,” he said. “This country, not to mention this state, is being deluged with lawsuits the likes and number of which we’ve not seen in our history.”

Regardless of the outcome of the legislation, Clarke said, “We are prepared to address whatever issues arise. We have served the people of Mississippi for nearly 60 years. We wi


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