Patients' Rights Comes Off the Critical List

With the Senate shift, Bush may have to soften his opposition

For years, passage of a Patients' Bill of Rights has been stalled as a debate rages in Washington over the potential costs and the possibility of runaway liability claims against employers. Although the public, fed up with HMO hassles, seems eager for reform, a titanic struggle among trial lawyers, insurers, and health-care providers has kept a bill of rights in legislative limbo.

All that changed on June 5 when Vermont Senator James M. Jeffords bolted the GOP to become an independent. With control of the Senate now in Democratic hands, the scales quickly are tipping toward a measure that would allow patients to sue their insurers. Senate Majority Leader Thomas A. Daschle (D-S.D.) has promised to bring a bill to the floor by mid-June. Its co-sponsors, Senators John McCain (R-Ariz.) and Ted Kennedy (D-Mass), claim to have 58 votes. In the House, Representative Charlie Norwood (R-Ga.), will push a similar bill that could pass by August.

NEW TACK. Although President Bush is turning up the rhetorical heat on McCain-Kennedy and has praised a rival bill that has a more limited right to sue, he may have to compromise. With midterm elections looming and health-care reform polling high among voters, Republicans will need to avoid being seen as anti-consumer. "Bush doesn't want to go into 2002 without [some] patients' rights," says Robert Laszewski, president of Health Policy & Strategy Associates, a consulting firm. "This is going to be an incredibly close election, and neither side can take any chances of being perceived as the bad guy."

Faced with a new reality, business is changing its game plan. "A just-say-no strategy isn't going to work this time," concedes Dan Danner, chairman of the Health Benefits Coalition, a high-powered industry group leading the fight against the bill. Corporate pragmatists want Bush to abandon his hard line and focus on fixing employer liability and sweetening the pot with health-care tax credits for individuals. That would give small-business owners an incentive to buy health coverage--and provide cover for Republicans voting for the bill. But such changes won't fly with Kennedy.

McCain-Kennedy would allow patients to sue their insurers in state courts--which tend to be more sympathetic than federal courts--for denying benefits or providing poor care. Patients also could sue for up to $5 million in federal court over disputes such as eligibility for medical procedures. Those provisions, business says, would increase corporate costs for health insurance, expose companies to litigation, and force employers to drop benefits. "It is the worst version of patients' rights yet," says Neil Trautwein, director of employment policy at the National Association of Manufacturers.

Industry's biggest concern is that workers would be allowed to sue self-insured employers, generally the largest companies. Labor unions that offer insurance plans have similar concerns and will join with business to oppose the provision.

Kennedy says he's open to compromise. "We're willing to make some adjustments," he told BusinessWeek. But he plays down concerns about liability, saying only companies that make medical decisions are affected: "No one is interested in creating employer liability if they're not involved in decision-making," Kennedy says.

FENCED IN. Bush thinks any kind of employer liability is a bad idea. Even with the Senate dynamic changed and a bill looking all but inevitable, Bush economic adviser Mark McClellan repeated the threat of a White House veto. That only set off a round of griping by corporate lobbyists, who say the White House needs to tune into political reality.

Senate moderates who want a compromise say they're being fenced in by Bush's stubbornness on one side and panicked business execs on the other. They fear that McCain-Kennedy's good intentions could boomerang if businesses drop coverage and increase the number of uninsured.

Still, the smart money is on all sides getting together. Democratic control of the Senate, voter demands for reform, and a looming election seem aligned to give patients' rights the final push.

By Lorraine Woellert, with Phoebe Eliopoulos, in Washington

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