Patients' Bill of Rights
Could Provide Patients With a Bigger Health Care Bill
Few issues are as fraught with peril as the proposed reform of Health Maintenance Organizations (HMOs). HMOs are the most affordable source of health care for millions of Americans, so it is vital that HMO reformers not jeopardize their existence and affordability.
Unfortunately, the sponsors of the so-called "Patients'
Bill of Rights" legislation now under consideration in Congress
fail to realize this. The end result of such legislation would
not be improved health care coverage - it could instead be a loss
of health care coverage.
As proposed, the Patients' Bill of Rights puts the health care coverage of millions of Americans at risk by relying on litigation to reform HMOs. For example, the McCain-Edwards-Kennedy bill approved by the Senate in July would allow personal injury lawyers to sue HMOs for up to $5 million for pain and suffering, plus punitive damages.1
A basic tenet of business is that rising operating costs lead to rising prices. At its core, an HMO is a business. Some HMOs will undoubtedly be forced to pay enormous sums to fight and pay damages from the lawsuits that this legislation will spawn. These expenses will be passed to patients in the form of higher prices.
A rise in prices would, in turn, lead to some Americans, possibly millions of them, being unable to find affordable health care coverage.
The framers of HMO reform legislation seem to treat employer-covered health care as an employee's God-given right, but many employers could be forced to stop providing health insurance if its price inflates too much. Currently, 72% of employers say they are somewhat or very worried that health care costs will grow faster than they can afford,2 which is why 96% consider patients' expanded right to sue a great concern.3
Naturally, the price hikes that the Patients' Bill of Rights would cause would also strike people paying for their own health insurance. For these people, the affordability of health insurance is usually the deciding factor as to whether or not they are insured. Today, 77% of uninsured Americans blame high costs for their lack of health care.4 This fact, combined with the prospect that every 10% increase in the cost of insurance generates a three to four percent decrease in the number of people who can afford coverage,5 leads to the inescapable conclusion that the actual outcome of the Patients' Bill of Rights could cancel any intended benefits. This legislation intended to make HMOs better could instead make HMOs unaffordable.
Perhaps no group would be harder hit by this legislation than African-Americans. Already, a troubling 40% of African-Americans are uninsured.6 Given that cost is the number-one reason people cite for lacking insurance, there is no telling how high the proportion of uninsured African-Americans could climb in the face of this legislation. Considering that African-Americans, on average, have a lower income than the rest of the population, this legislation will inevitably usher in a new and crueler era of minority health care coverage.
Of course, higher health insurance prices are not the only potential outcome that the Patients' Bill of Rights will inspire. It is equally possible that many HMOs would be forced to close, instantly stranding their patients without health insurance.
Simply put, there are better ways than lawsuits to assure that HMOs provide quality care.
In a sense, HMO reform is as delicate a political topic as there is. At stake is not just the well being of a few big businesses, but the health care of millions of Americans. The battle for HMO reform should be fought by free market processes and by informed legislators who are considering the implications on their constituents. Unleashing lawyers in search of huge settlements will not improve health care. Trial lawyers inevitably would approach HMOs as they did the tobacco industry: by suing them for as much money as possible. The result of tobacco litigation was higher cigarette prices, not safer cigarettes.
Contrary to trial lawyers' carefully-crafted claims, consumers do not historically emerge victorious from legal proceedings.
If HMOs require reform, they must be reformed in a way that
preserves public well being - through free-market decision-making
and legislation, but not though litigation.
1 "Employer Liability Focus of Senate
Patient Rights Debate," June 26, 2001, CNN, downloaded from
on July 6, 2001.
2 "Congress Should Address Voters' Real Health Care Concerns," The Health Benefits Coalition, November 18, 1999, citing the Kaiser Foundation, October 1999, downloaded from http://www.hbcweb.com/fact111699.htm on June 6, 2001.
3 "Congress Should Address Voters' Real Health Care Concerns," The Health Benefits Coalition, November 18, 1999, citing the National Association of Manufacturers, Washington, DC, February 1999, downloaded from http://www.hbcweb.com/fact111699.htm on June 6, 2001.
4 "Congress Should Address Voters' Real Health Care Concerns," The Health Benefits Coalition, November 18, 1999, downloaded from http://www.hbcweb.com/fact111699.htm on June 6, 2001.
5 Kevin Martin, "Minorities Rarely Winners in Class-Action Lawsuits," Houston Chronicle, August 1, 2000.
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Syd Gernstein is a research associate at The National Center for Public Policy Research, a Washington, D.C. think tank. Comments may be sent to [email protected].
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