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EMPLOYER
BASED HEALTH CARE:
THE DANGER OF HEALTH CARE PLAN LIABILITY
Legislation introduced
in the Ohio General Assembly creates a new type of state tort liability
which will threaten the ability of Ohio employers to provide health
care benefits to their employees. Essentially, the bills are designed
to allow individuals to sue their employer's state-regulated health
care plan if the plan does not pay for a specific medical treatment
they desire - whether it is an experimental cancer treatment or aromatherapy.
To attract and retain skilled workers, employers voluntarily provide
health care benefits as part of their wage and benefit program. Through
managed health care plans, employers pay for medically appropriate treatment
for their workers and their families. If this legislation is enacted,
the results will be catastrophic to Ohio workers. Employers who provide
managed health care benefits will risk not only an increase in costs,
but also the possibility of being sued. Those who cannot bear these
risks may be forced to drop or reduce health care benefits or to increase
employee cost-sharing. Ohio employers will be placed in the untenable
position of trying to balance the need to be financially competitive
to stay in business, against the need to recruit and keep skilled workers.
Employers Can't
Be Shielded
The bills purport to shield employers from liability, but realistically,
employers cannot be protected. The liability provision may be applied
to employers who sponsor fully-insured and self-insured benefit plans.
Although current federal ERISA law exempts most self-insured plans from
direct state regulation, changes in the law, recent court cases and
the practice of hiring state-regulated administrators for self-insured
plans are eroding the ERISA preemption protection.
An employer that exercises any discretionary authority over a health
care plan, whether selecting the plan or reviewing coverage decisions,
becomes subject to liability. To escape the risk of a lawsuit, employers
would have to totally abandon any involvement in the health care plan
offered to their workers.
While the legislation states that employers are exempt from the new,
statutory liability provision, it does not stop the courts from creating
new common law causes of action against employers. Ultimately, the decision
on whether employers are liable will be left to the courts around the
state, some of which have typically not been favorable towards business.
Health Care
Liability Will Increase Costs And Reduce Access To Coverage
A 1998 Barents Group study estimated that the liability provision alone
would add an additional 8.6 percent to health premiums that are already
expected to increase 5 to 20 percent this year.
A 1% increase in health care premiums has been estimated to cause approximately
200,000 people to loose coverage.
A US Chamber of Commerce survey found that 57% of small employers would
be likely to drop health care coverage if they were exposed to additional
liability.
Consumers Will Lose and Trial Lawyers Will Win
The first, best protection for consumers is access to affordable, quality
care. Marketplace competition during the past several years has contained
health care costs and expanded the availability of health care benefits
for more Ohioans. Holding employers and health plans liable will force
employers to increase employee cost-sharing, cut back coverage or drop
health care plans altogether.
There would be greater involvement by the courts and trial lawyers in
the health care decision-making process, encouraging more lawsuits and
increasing the burden on an already over-utilized court system.
Increased lawsuits would channel benefit dollars to trial lawyers and
away from claims payments and efforts to improve the quality of care.
Only 43 cents of every dollar awarded in medical liability litigation
goes to patients (Rand Corp). Trial lawyers would reap a financial windfall.
Conclusion
Resolving payment and coverage disputes in a timely manner is a laudable
goal, but it will not be met through the addition of tort lawsuits.
If this liability legislation is enacted, health care costs will increase,
the oversight of medical treatment to assure appropriateness will become
less effective, and employers will be forced to reduce or eliminate
health care coverage. More Ohioans will become uninsured and the competitive
business climate of the state will be damaged. The establishment of
a fair and timely dispute resolution process is a more effective and
less costly way to ensure that patients receive the benefits to which
they are entitled.
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