Operators fear ‘bill of rights’ will leave insurance costs at a premium – Legislative Update – restaurant industry

Operators fear ‘bill of rights’ will leave insurance costs at a premium – Legislative Update – restaurant industry – Brief Article

Milford Prewitt

WASHINGTON — With a lofty and benign-sounding title, the “Patients’ Bill of Rights” doesn’t immediately sound like a piece of legislation people should fear.

But to restaurant employers, industry lobbyists and employee benefits experts, the bill before Congress is a Pandora’s Box that contains yet more of the rapidly increasing employer-paid health benefits that are burdening businesses.

Both the largely similar Senate and the House versions of patients’ rights legislation passed last summer would give sick and injured workers a host of safeguards and mechanisms to secure quality and timely health care.

But what is infuriating employer and industry groups is a provision that allows employees to sue their employers, health maintenance organizations and insurance companies if decisions, treatments or procedures exacerbate a patient’s condition.

Defenders of the legislation say at the moment that only a handful of state courts allow employees to sue their employers’ health coverage insurers. Moreover, the defenders argue that a special legal distinction HMOs enjoy — that of being simultaneous decision makers and dispensers of treatment –currently renders those organizations virtually invulnerable to lawsuits from patients.

Concerns about the legislation surfaced just two days after Congress resumed the nation’s business after its winter break, when President Bush and Sen. Edward Kennedy, D-Mass., who is the key sponsor of the Senate’s version, resumed high-level discussions on a compromise bill.

The Senate bill — which passed in June by a vote of 59 to 36 — would permit aggrieved employees to sue in federal court and every state, even against an HMO.

A House version, which has somewhat more restrictive language favored by President Bush but which nonetheless parallels the Senate version, was passed in August by a 226-203 vote. Both bills would allow patients who are upset with their treatment, or lack of it, first to seek redress through an internal appeals process that HMOs and insurers will have to create.

Eclipsed by the events of Sept. 11, the anthrax attacks that followed, the war in Afghanistan and the recession, patients’ rights have been anything but top of mind for lawmakers until recently. But based on the intensity of discussions in the early days of the 107th Congress, pundits believe a law will be passed before the end of the year.

Proponents of the measures say Americans are in dire need of a patients’ bill of rights because many HMOs and employer health-care programs are mismanaged, leading to arbitrary decisions. Often, advocates of the bill say, patients are denied access to specialists or have recommended surgeries disallowed or can’t file claims for emergency-room care.

Scott Vinson, director of government relations for the National Council of Chain Restaurants, said passage of the bill only would exacerbate a bad situation — high health-care costs.

“These health [organizations] are not going to take these lawsuits lying down [if the law passes],” Vinson asserted. If HMOs and other providers “are subject to increased liability, they will have to raise their costs and they will pass them on to the employer when it comes time to write a new contract to cover their employees.”

Citing a recent survey of 20 major national restaurant chains that are members of the NCCR, Vinson said all of them already were experiencing high single-digit to double-digit percentage increases in health-care coverage, even without a patients’ bill of rights. He said the average was an 11-percent increase between December 2000 and December 2001. Between 1998 and 2001, health-care costs had jumped 80 percent, he added.

“If you have a patients’ bill of rights go on top of that, the premium rises even more,” he said.

Increasing health-care costs could mean scaling back or terminating benefits, some restaurant operators said.

Bob Friedman, president of 40-unit Red, Hot and Blue, the Arlington, Va.-based barbecue chain, conceded that he did not know much about the legislation but said any increases in healthcare coverage would force him to make some tough decisions.

“Obviously, we are opposed to anything that would push up the cost of providing insurance as it is,” Friedman said. “It is so expensive that we can only insure managers and key hourly employees. Any significant increases would either force us to cut back on the population we do insure or reduce benefits or raise the deductible.”

Alice Klepac, director of human resources for Schlotzsky’s Deli, which operates 30 of the chain’s 650 units, said she has been monitoring the progress of the patients’ bill of rights and has been in contact with her company s insurance brokers about the issue. She said one of her brokers is traveling to Washington soon to attend a meeting about the issue with legislators and other retailers and intends to give her a report on what he learns.

Klepac said she is troubled by the possible passage of the legislation because Schlotzsky’s currently absorbs 100 percent of the costs of health care coverage for eligible employees. Of the approximately 800 workers the company employs, Klepac estimated that 35 percent to 40 percent of them — mostly managers and hourly workers scheduled for 30 hours or more per week — don’t pay a dime for health care.

“Obviously, we’d like to keep it that way,” she said. “Health benefits are one of the things you need to keep a talented and competent crew.”

Klepac confirmed that healthcare expenses have increased for Schlotzsky’s, as they have for many employers, but mainly in the price of prescription drugs, which has accounted for the greatest percentage of healthcare increases.

Despite the new movement in the legislation, Brendan Flanagan, a National Restaurant Association lobbyist who handles health-care issues, said he does not think a congressional compromise on a patients’ rights bill is imminent.

“It’s true this legislation has picked up more momentum, and that is why we are doing everything we can to let Congress know that this will only increase health-care costs,” he said. “We need to make health care more accessible, not less accessible.”

Doug Gammon, senior vice president of human resources for Taco Cabana, said the chain operator already is paying 70 percent of the health-care costs for 450 of the 4,500 workers at its 111 company-operated restaurants. He said that if employees are required to cover more, it would be a “negative on recruitment.”

The Association of Trial Lawyers has argued that employers’ fears of higher premiums may be unjustified. The group said that even in the few states where workers are permitted to sue insurers and HMOs, like Texas, such lawsuits are rare. There’s no reason to believe the rates will increase if the law passes, the ATL contends.

“If you are sick, the last thing you want is a lawyer,” a spokesman for the trial lawyers group remarked. “You want a doctor. It’s very expensive and time consuming going to court.”

The spokesman asserted that the only change trial lawyers want is “a fair and level playing field, because these insurance companies have far more rights than we do. We think if consumers had the option to sue, these companies would think twice about some of their decisions.”

COPYRIGHT 2002 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.

COPYRIGHT 2002 Gale Group