Real Rights to Consumers

The Senate once again is heading into the operating room to try to “fix” the U.S. health care system. But beware of legislators wielding a scalpel.

Like any surgeon, their goal is admirable: To give consumers unhappy with their health care arrangements greater authority to get the care they want and need.

But the Patients’ Bill of Rights that senators are carving up is fatally flawed. It will drive up costs, cause millions to lose their health insurance, force more private physicians into group practices, and spend more health care dollars on lawyers.

Washington has been preoccupied with this issue even while opinion polls show a large majority of Americans are satisfied with their health care arrangements and would object to changes that would drive up costs and increase the number of uninsured.

The most hotly debated part of the bill, and the one that poses the biggest threat, is whether patients can sue their health plans. A bill by Senators Edward Kennedy (D-MA) and John McCain (R-AZ) would give much more authority over lawsuits that a competing bill introduced by Senators John Breaux (D-LA) and Bill Frist (R-TN).

But with either, the new wave of litigation could bankrupt health plans and divert billions of dollars from health care to lawsuits.

What is wrong with this picture? Why do consumers need an act of Congress to make the market more responsive? This is America! People are used to getting what they want, when they want it, for the price they are willing to pay.

But not in the health sector. People are rightfully unhappy with roadblocks to medical care that they need when they are most vulnerable.

The solution, however, is not to create a bureaucratic maze of impossibly complex legislation and lawsuits. Instead, we should have a system in which people can choose the health plans that suit their needs, health plans that they have purchased directly or through groups negotiating in their best interest.

Of course, people should be able to sue their health plans, but a lawsuit should be their last resort. First, they should be able to vote with their feet and select a plan that caters to their needs. Then, if they are denied the care, they could take their health plans to court for breach of contract just as they would under any other contract arrangements.

Why can’t they do that now? Because they don’t own their health insurance policies and therefore have little recourse in either the marketplace or in the courts.

Most Americans receive their health insurance as a benefit through their jobs because tax law makes this arrangement so attractive. But this also means that the employer owns the health insurance policy and decides the terms.

To control costs, many companies hire health plans to “manage” the health care of their employees. But more and more employees experience “management” as “denial.”

If employees decide they don’t want the coverage their employer offers, they can either go without (as a growing number are doing) or try to purchase health insurance in the private market.

The clincher: If they buy their own, most will have to use after-tax dollars. This can make a family policy cost several thousand dollars more than the one their employer offers — if they can find one to buy.

There is a simple dictum that explains the dilemma: Whoever controls the money controls the choices. If it is employers, they will pick the health plan and decide the terms. If it is government, it will create tens of thousands of pages of regulation to govern the spending of every penny.

The long-term solution is for people to select and own their own health insurance, picking a policy that best suits them, just as they do every day in purchasing life, home, and car insurance. Health plans and insurance companies will be forced by competition to respond to the demands of their customers for quality, affordable coverage.

There are a number of initiatives being considered in Congress that would assist consumers in obtaining their own private health insurance by directing refundable tax credits to individuals. This option also would begin to revitalize the fragile and shrinking market for private health insurance.

The real cure will be a health care system in which people make their own decisions about the health coverage they want, coverage that they can take with them if they move, change jobs, retire, or start their own businesses.

This would be a giant step in the right direction toward a responsive free market for health insurance — one in which health care dollars are going to medical care, not lawsuits.

Grace-Marie Turner is president of the Galen Institute, a health and tax policy research organization based in Alexandria, Va., and can be reached at She is the editor of “Empowering Health Care Consumers through Tax Reform,” University of Michigan Press, 1999.

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