April 7, 2000

Proposed ERISA reforms worsen health care problems
Patients' Bill of Rights not a fix, says health care expert

The current debate over patients' rights misdiagnoses the problems with the Employee Retirement Income Security Act, according to a Cato Institute study released today.

The 1974 act, which subjects most employer-provided health care plans to federal laws and exempts them from state statutes, has come under fire as dissatisfaction with health maintenance organizations (HMOs) has grown. Critics charge that additional federal laws are needed to make it easier for patients to sue their HMOs for medical malpractice, but the study states that this is based on a misdiagnosis of ERISA and HMO problems.

Study author Greg Scandlen says that the right to sue HMOs for malpractice already exists under state laws and that proposed federal reforms would actually result in poorer health care coverage. "To the extent [an HMO] 'practices medicine,' it is subject to state-based remedies for malpractice," Scandlen writes. He says critics confuse the right to sue HMOs in contract disputes with the right to sue them for malpractice. He added that although ERISA does prevent patients from suing over contract disputes in state court, it does not place such restrictions on malpractice suits.

Scandlen warns that the proposed federal reforms would further undercut state authority in health care and cause other problems such as making it more difficult for employers to offer their employees better health coverage. "Such a law could keep new, patient-centered health plans from ever being invented. New federal legislation could freeze into place the kind of health care we have today and inhibit the evolution of newer, more responsible approaches," he writes.

Scandlen wrote the study, "Legislative Malpractice: Misdiagnosing Patient Rights," while he was a fellow in health policy at the Cato Institute.

"Legislative Malpractice: Misdiagnosing Patient Rights"