Would federal law cripple state's patients'-rights bill?

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If Congress passes a patients'-rights law, how will it affect patients in Washington state, where the Health Care Patient Bill of Rights is to take effect next month?

The answer is far from clear, but either of the two proposals being debated in the U.S. Senate this week will do one major thing the state law doesn't: regulate the health-insurance plans offered by self-insured companies.

Self-insured companies are among the state's largest employers, such as Boeing and Microsoft; it is estimated that half of the employees covered by health insurance in this state work for self-insured companies. But a federal law prevents states from regulating a company's employee benefits, including insurance.

The state law, which regulates commercial insurance companies, is considered to be a strong patients'-rights tool, allowing patients who believe they were harmed by their insurer's decision to sue in state court. Although 45 states have some sort of patients'-rights bill, only eight, including Washington, allow consumers to sue their insurers, said Rachel Morgan, senior policy specialist with the National Conference of State Legislatures.

And that ability to sue is one of the most contentious issues in the Senate debate. One bill, sponsored by Sens. John McCain, R-Ariz., Edward Kennedy, D-Mass., and John Edwards, D-N.C., would allow suits in state and federal court, with unlimited compensation for actual losses and suffering, and a $5 million federal-court cap for punitive damages.

The competing bill, sponsored by Sens. Bill Frist, R-Tenn, John Breaux, D-La., and James Jeffords, I-Vt., would allow lawsuits only in federal court and place a $500,000 cap on damages for pain and suffering, with no punitive damages allowed.

Critics say the Kennedy-McCain bill would cripple health plans and employers, line the pockets of trial lawyers and end up hurting consumers in the long run.

Supporters argue that the bill contains sufficient protections for employers, who would be liable only if they made direct, individual medical decisions, and that health plans provided by self-insured employers shouldn't be exempt from lawsuits.

Among those who plan to be in Washington, D.C., today is Dylan Malone, an Everett father who lobbied for the state law after he discovered that the state could not regulate the insurance plan offered by his self-insured company.

His son, Ian, was born brain-damaged nearly two years ago and needs nearly constant nursing care in order not to choke. After the insurance company told the family it wouldn't pay for Ian's care, the family lobbied for the statute in Olympia, even though Malone says they knew it would have no effect on their case. Their plight was picked up by then-Vice President Al Gore, who was beginning to campaign for the presidency, and Ian became a poster boy for patients' rights.

The insurance company, Aetna U.S. Health Care, relented, and Ian now has nursing care 16 hours a day. But every day, says Malone, he wonders how long the care will last. "Every single day, I go to the mailbox, and I hope to God there is no denial from Aetna," he said.

"(If there is), I can't call the insurance commissioner - it's out of their jurisdiction. There is no HMO police. I can't even file a lawsuit."

What worries advocates for this statute is that somehow a federal law would undo the good work done by this and other states, said Bill Hagens, deputy commissioner for policy for the state's Office of the Insurance Commissioner.

Supporters of a federal bill say it would provide a floor so that patients who live in states that have weak or nonexistent patient protections would have rights, as would those covered by self-insured companies.

But so far, there appear to be no guarantees that a federal law wouldn't supersede state laws.

The intent of a federal patients'-rights bill, said Larry West, spokesman for U.S. Sen. Maria Cantwell, is to "enhance state laws," extending the protection many states have offered to patients covered by commercial companies to patients covered by plans sponsored by self-insured employers, as well.

In this state, those protections include:

Insurance companies, some of whom supported the state law, worry that federal legislation may result in confusion, at best.

"The worst scenario for a health plan is to try to reconcile two competing laws," said Chris Bruzzo, Regence BlueShield spokesman. "That creates nothing but lots of administrative cost and complexity, and usually doesn't add any value (for the consumer)."

If a federal law is passed, it still won't be clear which entity will have the primary responsibility for regulating insurance plans, said Morgan, of the legislatures conference.

"Is it going to be the federal government or the state?" she asked. "And if you're going to break it apart, where are you going to break it? There is still a lot to discuss."