- The Washington Times - Friday, January 21, 2000

Many employers say they would eliminate health care benefits for their workers if Congress passes a law that allows patients to sue their managed care plans.
More than a third of the employers who responded to a survey by Hewitt Associates, a global management-consulting firm, said they probably would get rid of coverage if new legislation makes managed care plans liable.
Employers providing health insurance fear that legislation could expand health care-related lawsuits to them.
"There's a lot of litigation in the United States now," said Frank McArdle, principal and manager of Hewitt's Washington research office. Companies don't relish additional litigation, he said.
Employers do not want to take the risk of continuing to offer health benefits if Congress passes a law that would give employees the right to sue health maintenance organizations (HMOs). Their costs would increase significantly and employers would be faced with unpredictable lawsuits that could result in large sums of money being awarded to workers.
"It all boils down to cost," said Paul Fronstin, senior research associate at the D.C.-based Employee Benefit Research Institute. "But there's no way to know and employers don't want to take the risk."
Health coverage is the most important benefit for a worker, Mr. Fronstin said. Last year, the House passed managed care reform legislation that included giving patients the power to sue their HMOs. The Senate version did not include that provision. A Senate-House conference committee is trying to work out a compromise bill.
"A lot hinges on the exact wording and how exposed employers will be within that wording," Mr. McArdle said.
Julia Bellinger, a lobbyist for the Society for Human Resource Management, said she is not surprised by the survey's results.
"Liability for employers is such a big thing," she said. "If employers are held liable, they would want to get out."
According to the Hewitt survey, released this week, 95 percent of the 600 large companies surveyed said their health care benefits are used for attracting and retaining employees.
Just about every large employer and more than half of the businesses with less than 200 employees offer health care benefits.
Fairfax County, Va., Chamber of Commerce opposes any legislation that would create HMO or employer liability for medical decisions.
The bottom line is cost, said Tony Howard, Chamber spokesman.
"It will have a disproportionate effect on small businesses that typically have thinner profit margins," Mr. Howard said. "It puts them at a severe competitive disadvantage."
The smaller employers won't be able to afford health benefits and "more Virginians will be uninsured," Mr. Howard said.
Administering and paying for health insurance have become a distraction for many businesses, said Steve Wetzell, executive director of Buyers Health Care Action Group, a coalition of large Minnesota companies that jointly purchases health benefits.
The liability factor would give companies one more reason to stop providing coverage, he said.
Making their case, employers point to large jury awards handed down against HMOs in states that already allow lawsuits. For instance, a California jury last year ordered Aetna to pay a record $120.5 million in damages to a woman whose husband fought until his death for coverage of experimental cancer treatment.
While many employers say they will eliminate the coverage benefit, Mr. Fronstin wonders what large employer would make the first move. He can't see a large company like IBM or At&T; going ahead with the move in a job market that is so tight.
"It may be the end of health care benefits as we know it," Mr. Fronstin said.
Companies will gradually begin to limit their health care benefits and eventually drop coverage over time, Mr. McArdle said.
With the fear of liability, companies may also reconsider their role in providing employee health benefits.
Employers who pay claims out of their own pockets, and essentially act as the insurer, will get rid of that option, Mr. McArdle said. Employers may just give the money to the workers so they can buy their own coverage.
"They will redesign employee access, but remove the employer from direct liability," Mr. McArdle said.

This article is based in part on wire service reports.

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