Tuesday, April 18, 2006
John Godfrey and Mark H. Anderson report (their article is quoted with permission of the authors) in Dow Jones Newswires on House efforts to make it easier for employer-sponsored health plans to obtain reimbursement when a third party pays for some or all of an insured employee's damages:
House Republicans are trying to use a pension bill being negotiated with the Senate to overturn a 2002 U.S. Supreme Court ruling making it more difficult for employer-provided health plans to recover expenses in third-party lawsuits. Health insurers and their allies say the House's proposal - which could also affect a related third-party insurance case pending before the Supreme Court - clarifies current law and will help keep health care premiums down. Opponents, including victims' advocates and trial lawyers, say it will put health insurers ahead of victims and that there is no evidence these types of recoveries have ever helped lower premiums.
At issue are cases where an employee's health care pays medical expenses for an incident in which another party is liable, such as an auto accident. Insurers would like to have the guaranteed right to sue the victim to recover their expenses if the victim received compensation for the incident from someone else, such as the auto insurance company for the person responsible for the accident.
The insurance industry says the issue is clear cut: If a health plan paid for medical services that another party also paid for, the health plan should be reimbursed.
Complicating the debate is the fact that unions sponsoring their own health plans are joining forces with the health insurance industry, forcing Democrats to choose between two sets of groups that would traditionally be their allies: victims groups and trial lawyers on the one hand and some unions on the other hand.
Experts on both sides of the issue agree that in the vast majority of cases there is never any question of whether the health plan will be reimbursed; in most cases the third party insurer sends a check directly to the health plan. And even in cases where there isn't enough money to go around, an agreement is almost always reached. The problem is that it is unclear whether ERISA, the federal law governing employer provided benefits including health plans, gives health plans the right to demand reimbursement.
According to a report prepared by the Groom Law Group being circulated on Capitol Hill, reimbursement reduces health plan costs by 1% to 2% annually, saving private employer-sponsored plans $3 billion to $6 billion each year. "These savings have the direct result of lower premiums for individuals with employer-sponsored coverage," the report concluded.
But University of South Dakota law professor Roger Baron counters that most research shows that reimbursement is not factored into premiums because of its unpredictable nature. And in the high dollar cases most likely at issue, most of the money recovered will go to the health plans' commercial insurers, not to the health plans, he said. More importantly in settlements where there is not enough money to go around, the victim would be placed at the end of the line were the provision being sought by insurers be signed into law, Baron said.