June 27, 2001 | Commentary on Health Care
In an effort to help Americans unhappy with the service they're getting from "managed care" health plans (most, in fact, report they're satisfied with their coverage), federal lawmakers are laboring mightily to enact a "Patients' Bill of Rights" that would let patients sue those plans when they feel they've been mistreated.
Representatives from both parties are still hammering out the details, but one way or another, more lawsuits seem imminent.
Trouble is, this won't cure what ails our health-care system. Indeed, it could wind up doing some serious harm, as health-maintenance organizations (HMOs) respond to the prospect of higher legal expenses simply by jacking up premiums. This would force many employers to make their employees pay even more for health care. And it may make it necessary for some employers to drop coverage altogether.
But there's a better solution. It's the same one that gave us 5-cents-a-minute long distance, $10 overnight shipping to anywhere in the world and 59-cent cheeseburger day at McDonald's: Free-market competition.
Let workers choose their HMOs -- rather than be forced to take the one their employer picks -- and watch the difference. Some plans will keep costs down but remain as maddening as they are now. Others will be more expensive but offer better service. Some will fall somewhere in-between. Still others will go out of business.
And soon Americans will have something they don't have now: A real choice.
More than 90 percent of Americans with health insurance -- HMOs or otherwise -- are covered through their employers. Less than half have any choice among plans. Moreover, the list of choices is small, and the employer makes the list. And employers are not exactly well known for seeking employee input when assembling such lists.
Given that most workers have the option of accepting their employers' insurance or having none at all, it's no surprise that some are dissatisfied with their employer-sponsored plans and -- understandably -- feel frustrated when they can't do anything about them.
That's why the object of health-care policy should be to make it easy for consumers to find coverage that meets their needs and to be able to do it other than through their employers.
If Americans had real choice, insurance companies would have to compete for their business on the basis of consumer satisfaction. This alone would solve the problem a "Patients' Bill of Rights" is supposed to address -- without extra lawyers (which ought to be a last resort for disgruntled patients).
Two alternatives to what Congress and the administration are proposing would give Americans the decision-making power they lack. One is to allow employers to take the money they pay in premiums on the employee's behalf and instead offer "defined contributions" -- an amount workers can use to buy coverage from the health plan they select.
These would work like 401(k) contributions do. Employers handle the paperwork but leave the important decisions to their workers. Employers merely send a check -- which includes their contribution and employees' contribution (withheld, as now, from their paychecks) -- to the insurance company chosen by each employee.
Everyone wins. Employees get the coverage they want, and employers stop shopping for insurance.
The second alternative would help those workers whose employers don't offer health insurance (a group ignored by the legislation now before Congress). Lawmakers should offer them refundable tax credits. This would give lower-income workers, who make up most of the uninsured, access to comprehensive health benefits.
One major study that examined health-insurance plans and the leading tax-credit proposals showed that the credits would make insurance more affordable, with about three out of every four health plans charging premiums equal to or less than the amount of the credit.
Credits also would give workers and their families the leverage a "Patients' Bill of Rights" is meant to provide. After all, employees who buy plans directly from insurers become party to the contract. If insurers don't live up to the contract, employees can sue.
But, thanks to the nature of competition, such lawsuits would occur far less frequently than they would under a "Patients' Bill of Rights." HMO officials wouldn't have to be forced to become more responsive. They'd do it because it's in their self-interest.
Lawmakers may think they're doing patients a favor by letting them sue their way to good health. But they've made a serious misdiagnosis. Let's hope they're willing to consider a second opinion.
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