Social Issues: Health Care
Patients' Rights for All Patients?
Lots of states have acted. Now it's Washington's turn
One of the issues most likely to transcend the partisan rancor in Washington this session is a patients' bill of rights. The House got so far last year as to pass a bill giving Americans the right to challenge medical decisions made by insurers and health maintenance organizations. The idea foundered in the Senate over a provision that would give patients the right to sue--provoking fierce opposition from the insurance industry and Corporate America. But the continued outcry over HMO-coverage denials has left Republicans, who opposed the bill, eager to find a compromise. On Feb. 6, Senator John McCain (R-Ariz.) and Senator Edward Kennedy (D-Mass.), announced their joint sponsorship of a bill that would allow lawsuits, but with some restrictions. The Bush Administration largely agrees but favors placing tighter restrictions on suits, such as caps on punitive damages awards.
The experience of the states may give federal lawmakers some reassurance. Since 1998, 27 states have passed limited patients'-rights bills that allow patients to appeal medical decisions to external review boards. This brings to 38 the number of states with such appeals programs (map). In addition, seven states, led by Texas, have passed laws giving patients the right to sue HMOs, and 26 more are considering them.
Though the laws are still new, so far there are no signs of the crippling wave of litigation feared by business. "Doomsday just hasn't occurred," says D. Ted Lewers, chair of the board of trustees of the American Medical Assn., which supported the Texas right-to-sue law.
At the same time, however, the states' activism has also led to a growing schism between those Americans who have the right to stand up to HMOs and those who don't. That's because many of the country's 26 million public-sector workers aren't covered by state laws. Nor are the 55 million or so employees who work at large corporations, which are excluded from state laws by the federal Employee Retirement Income Security Act of 1974 (ERISA). Until there's resolution in Washington, roughly half of Americans will have some patients' rights, while the other half--mostly employees of Corporate America and their dependents--will not. "Workers in the biggest firms have the fewest protections," says Larry A. Levitt, a policy analyst at the nonprofit Henry J. Kaiser Family Foundation, which studies health care.EVEN SPLIT. Thus far, the states' track record shows that external appeals, which the insurance industry supports, can work smoothly. The state typically selects an independent review organization (IRO) made up of specialists who must come to a decision within 15 to 30 days of hearing the claim, or 24 to 72 hours for urgent care. Overall, IROs seem to be splitting decisions fairly evenly between health plans and patients; in New York and Texas, the ratio has been 50-50. Both sides say they're getting a fair shake, and few states have logged complaints about the process.
Nor have the new laws triggered a flood of appeals. Most state programs have rendered fewer than 100 decisions a year. It's not clear whether that reflects consumers' satisfaction or merely a lack of awareness of the new laws. New York, the state with the most appeals, had 659 in 1999, the program's first year, while in an additional 169 cases, the insurer gave in once the patient filed a complaint. "HMO enrollees in New York aren't more upset than elsewhere; we developed an aggressive outreach program" to consumers, says Neil D. Levin, head of the state's Insurance Dept. To publicize the new laws, about a dozen states have recently launched campaigns to get the word out.
Even the right to sue, the real sticking point in the proposed federal law, hasn't yet caused an outbreak of litigation. Texas' right-to-sue law, the nation's first, took effect in 1998, after passing without then-Governor George W. Bush's signature. (Bush opposed the bill, but let it take effect without his signature.) The law allows patients to sue their health plans in state courts over malpractice issues. Plaintiff lawyers are trying to use it to contest coverage decisions as well, though insurers have so far opposed these efforts. The courts have yet to sort the issue out, but both the Kennedy-McCain bill and Bush would allow employees to sue over some coverage decisions.
So far, though, Texans have filed only about 15 suits under the new law. And few are predicting a barrage of cases, according to State Attorney General John Cornyn, a Republican. Similarly, experts say that at most only a couple of suits have been filed in the other six states with such laws. The reason: Appeals procedures settle most cases before they get to the lawsuit stage. Except for Maine, all states with right-to-sue laws require patients to complete an external review before going to court. That way, patients have an alternative to suing--and health providers get to hear what an objective outsider has to say before deciding whether it's worth defending their position in court.
Business groups argue that state experiences aren't an accurate gauge because a federal right-to-sue law would throw in a new element: employer liability. ERISA, the federal law governing self-insured companies, exempts those companies from state lawsuits over coverage denial. (About two-thirds of big companies self-insure, meaning they use insurers to administer their plans but pay medical claims themselves.)
But ERISA "does not separate employers from the health plans they sponsor," warns Kate Sullivan, who directs health-care policy at the U.S. Chamber of Commerce. Business fears that a federal right to sue could lead employees to try to include their companies in suits against HMOs. "It would be a field day for trial lawyers," says Richard I. Smith, policy vice-president at the American Association of Health Plans, the managed-care industry trade group.
Proponents counter that companies would be shielded as long as they are not directly involved in making medical decisions. Now, with the politicians in Washington closing in on an agreement, employers and rights advocates may soon find out who's liable when patients sue.Return to top