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CNN Live At Daybreak

The High Cost of American Health Care

Aired July 31, 2001 - 08:23   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: As you know too well, the cost of health is a leading issue, and the price tag is growing higher every day. The costs are being passed from doctors and hospitals to health insurers and then right on to you.

An explanation from Peter Viles of CNN Financial News.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice over): While Congress argues over the rights of patients, corporate America pays most of their bills. And those bills are rising at a breakneck pace.

Consulting firm William Mercer estimates PPOs are seeking premium increases of 16 to 17 percent for next year; traditional indemnity plans, 20 percent; and HMOs, all but throwing in the towel in the fight to contain costs, seeking increases of 20 to 50 percent.

The Congressional Budget Office estimates the patients' bill of rights that passed the Senate would add another 4 percent to those increases, although some estimates are even higher.

DAVID SHOVE, PRUDENTIAL SECURITIES: Nobody really knows. There's two things here. One is the actual costs of the litigation. That's probably minimal. Not that many lawsuits come out of these things. The other thing is that the companies change the way they pay claims and they start paying them more liberally, and that does add fuel to the premiums. We expect that it's somewhere between 3 and 5 percent.

VILES: Employers generally pay 60 to 80 percent of health care premiums, and some companies that purchase self-insurance are already paying more.

BOB SHANNON, WILLIAM M. MERCER: What we're now seeing this year is that those same insurance companies are coming back and saying, we need to have premiums anywhere from $9 to $17 per participant in your plan to cover the potential litigation risk that might come about as a result of the patients' bill of rights.

VILES: All of that said, politics is a small factor in rising health care costs. Analysts cite the aging population, the popularity of new drugs for everything from arthritis to impotence, and the new- found pricing power of doctors and hospitals. (on camera): The bottom line is that with or without a patients' bill of rights, many HMOs have already changed the way they do business and changed what they charge for it. And that's largely because doctors and patients simply rebelled against the cost containment that was at the root of the HMO business model.

Peter Viles, CNN Financial News, New York.

(END VIDEOTAPE)

COLLEEN MCEDWARDS, CNN ANCHOR: More now on the patients' bill of rights. Two guests joining us today. Louis Saccoccio is with the American Association of Health Plans. Judy Waxman is with Families USA. They both join us to talk a little bit more about this.

Folks, one of the things we keep hearing is that even with this kind of legislation -- we just heard it in the piece there -- there won't be that many lawsuits. That the real purpose of giving people the right to sue their HMOs is to have that big stick -- that that's what is important.

Judy, maybe you can get us started on this. What do you think?

JUDY WAXMAN, FAMILIES USA: I think that's what is important. I think that the consumer is afraid they won't get the health care when they need it. So the idea that a company is accountable for its acts means to the consumer that the plan will do the right thing in the first place. That the care will be provided in the first place. And there really won't be a need for any lawsuit at the end of the day.

MCEDWARDS: Louis?

LOUIS SACCOCCIO, AMERICAN ASSOCIATION OF HEALTH PLANS: Well, the difficulty is that you don't want to confuse accountability with liability. You don't want to expand the flawed system. Doctors know the medical malpractice system is quite flawed. Why take the risk? Why expand liability? You could have patients' rights without expanding liability, without adding to the cost and risking more uninsured. Why not go with a patients' bill of rights that does not expand liability, and that gives patients rights without the expanded costs and litigation that goes along with, you know, these other models that have expanded liability?

MCEDWARDS: All right, July, well, what do you say to that?

WAXMAN: I say the cost is really minimal as your prior piece said. The litigation itself might raise premiums 1 percent phased in over five years. That's not really the point. That number, by the way, comes from the objective Congressional Budget Office.

The point is that HMOs -- pardon me -- are the only industry in the United States that are not held accountable, that are not subject to lawsuits if in fact they mess up, if in fact they don't provide the care that they tell the consumer they are going to. So we think it's really a loophole in the law that needs to be closed. And it needs to be closed for the consumer's sake. MCEDWARDS: And just on the issue of those numbers, I mean the numbers we are working with here by that independent review depends on which bill you look at, whether it's the Democrat version or the Republican version. But the range is 4.2 to 2.9 percent in terms of an increase. Louis, is that too much?

SACCOCCIO: Well, I think any increase is too much, because any increase that you have affects premiums, affects employer's decisions about the coverage they provide to their employees. And ultimately you lead -- that leads to more uninsured.

With respect to Judy's point about HMOs not being subject to lawsuits, HMOs are subject to lawsuits all of the time. This is not a question or whether or not you can sue the HMO, but this is a question of whether or not you want to expand liability, whether or not you want to work off of a flawed model, expand the liability system. You just can't sue your way to better health care. What you want to do is take those type of steps that are reasonable steps that provide patient protections without increasing the number of uninsured's.

MCEDWARDS: Well, Louis, why don't you get a little more specific there if you could? I mean, what should be done to make HMOs more accountable, as you say, if they are not liable?

SACCOCCIO: Well, I think the perfect model for this is the external -- independent external review. And basically what that is is when there is a dispute between a health plan and a patient about what should be covered and what not should be covered, you send that dispute to an independent review panel. One that has expertise. It's independent from the health plan, and the make the decision. And that -- and you can do that without expanding liability. It protects the patient.

And even when you ask doctors, by a margin of three to one doctors would rather see this independent review system as opposed to expanded liability. So we think that that's certainly the way to go. That's the way you have accountability.

MCEDWARDS: Judy, both of the bills that the government has been looking at do require review and appeal before a lawsuit.

WAXMAN: Absolutely.

MCEDWARDS: Do you need that extra step, do you think?

WAXMAN: You need both steps. We absolutely support the external review, but you also need the ultimate fix, so the plan knows that at the end of the day they should do the right thing so that no one has to go to court.

I'd like to point out Texas, where a patients' bill of rights passed about five years ago. And indeed, it had both of these provisions -- the external review and the right to sue. Most people go through the quick and easy external review. That's what they want to do -- find out, should I get this or not? But then, there is that ultimate choice of going to court if need be. But only 17 people have done that in the last five years. And I would also like to point out that in the state of Texas, premiums have held steady, and in fact the number of uninsured's are going down.

MCEDWARDS: All right.

WAXMAN: So the rest of this noise is really a scare tactic.

MCEDWARDS: Judy, you just got the last word. We have to leave it there. But I want to thank you both. Louis Saccoccio and Judy Waxman, thanks so much.

WAXMAN: Thank you.

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