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Commentary and opinion on current civic, political, and religious events and issues.

Past Issue
2 July 2001

Northern City Journal
(ISSN 1528-9575)
Vol. 2, No. 27

Minneapolis, Minnesota

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Patients' Right to Sue One Other

The Patient's Bill of Rights will increase health care costs and enrich class-action lawyers. A far better (and simpler) solution would make all health care premiums tax deductible.

by Jerome F. Winzig

There is a lot of rhetoric in Washington about the "Patients' Bill of Rights," a misleading name if there ever was one. Health plans have become everyone's scapegoat for what's wrong with health care in America. Managed care plans are portrayed as uncaring ogres who callously deny dying patients necessary treatment in pursuit of the almighty dollar.

Underlying all of this is a contradictory sentiment regarding health care. It seems everyone is complaining about the rising cost of health care. Who pays for those costs has become a major bone of contention in labor negotiations. At the same time, there is an outcry against efforts to contain these rising costs by creating managed health care plans.

However, the Patients' Bill of Rights will only make the problem worse. A key provision of bill that just passed the U.S. Senate does not solve the problem. Instead, it gives patients the right to file class-action lawsuits against private health care plans. But almost no one points out that all of us will pay the cost of these lawsuit settlements, which will primarily enrich class-action lawyers. Indeed, this bill ought to be named the "Patient's Right to Sue One Another for the Benefit of Class-Action Lawyers."

The Congressional Budget Office estimates that this legislation will increase health care premiums -- which are already increasing between 8 and 15 percent a year -- by another 4.8 percent. The likely result is that more employers will drop their health care coverage and those that don't will also incur additional administrative responsibilities that will also affect how much they can pay employees.

Last week, an editorial in the Wall Street Journal proposed modifying the proposed Patients' Bill of Rights in two important ways. First, require patients to sue individually; class-action lawsuits would not be allowed. Second, cap lawyers' contingency fees at $100,000 or 5 percent of the total settlement, whichever is greater.

These changes would focus the legislation on the alleged problem: specific patients who are denied health care that they need. Patients would only be able to sue for damages they themselves endured. Furthermore, class-action lawsuits, which have brought enormous windfalls to lawyers in other areas with little or no benefit to the consumer, would be prohibited.

It seems the authors of this legislation realize it will be extremely costly, because the bill excludes the country's largest health care insurer: the federal government. The bill will not allow lawsuits by the millions of patients ensured by Medicare, Medicaid, the Federal Employee Health Benefits Program, and the Veterans Administration Program, among others.

Robert Moffit of the Heritage Foundation says, "This is not an oversight. This is deliberate. The reason is that the government can't afford it. They know that there would be an absolute explosion in costs to defend lawsuits. In Medicare, for instance, the denial of claims for medical necessity exceeds that of the private sector."

The proposed legislation ignores the main problem with health care, namely, that membership in a managed care plan is involuntary. There is a very simple remedy that would also address all of the problems allegedly addressed by the Patient's Bill of Rights: make all health care premiums tax deductible, not just those provided by employers.

If we could all go out and buy our own health care coverage and deduct it on our income taxes, most of the current problems would disappear. Health care plans would be forced to serve patients better, since those patients would be their customers and would have the power to take their business elsewhere. As a side benefit, employees would no longer feel locked into a job, since their health care coverage would be completely portable.

Unlike the Patients' Bill of Rights, which is laden with bureaucratic provisions, this remedy would be astonishingly simple to implement. Just make health care premiums tax-deductible for everyone, starting now. The marketplace would take care of the rest. And, since employees would be purchasing individual plans, they would be able to sue without any change in existing law.

Don't hold your breath for such a remedy, however. Just imagine the reaction of the Association of Trial Lawyers of America and the class-action lawyers.

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