NU Online News Service, June 24, 8:50 p.m.–Minneapolis

The National Association of Health Underwriters, Washington, asked members here for its annual convention to call and e-mail Congress immediately to support efforts by Sen. Phil Gramm, R-Texas, to amend S. 283, a major managed care bill that is now on the Senate floor.

Gramm wants to change S. 283, the Kennedy-McCain managed care bill, to eliminate a provision that could expose sponsors of employee health plans to liability lawsuits when the sponsors are “directly involved with denials of care.”

Sens. Edward Kennedy, D-Mass, and John McCain, I-Ariz., the sponsors of the bill, say the provision would have little practical effect on employers that buy health coverage from insurers or hire third-party administrators to run self-funded plans. But Republican Senate leaders, and health insurance and employer groups say the provision could create huge problems for employers, because it would make the degree of an employer’s involvement in care a “triable fact.” Patients’ lawyers could use their ability to drag employers into court to force even employers with strong cases to agree to out-of-court settlements, opponents of the provision argue.

Opponents say the employer liability provision could gut the entire private U.S. health insurance system, by scaring employers away from the system.

If Senators vote against the Gramm amendment, “it’s a very visible vote against employers,” Janet Stokes Trautwein, NAHU’s director of federal policy analysis, told NAHU members.

Because the defeat of the Gramm amendment would be so hostile to employers, Democrats might end up passing a weaker employer exemption even if they defeat the Gramm amendment, Trautwein said.

S. 283 is competing against S. 889, the Breaux-Frist Jeffords managed care bill. S. 889 would permit patients to sue health plans for compensation for actual economic losses, but limit awards for pain and suffering to $500,000, and prohibit “punitive damages” — awards imposed solely to punish alleged wrongdoers for their actions.

Republican leaders and other supporters of S. 889 say the bill would give injured patients and their families relief without causing as much damage to the private health insurance system as S. 283.