The Magazine

The Patient's Right Not to Sue

How about a right to opt out?

Aug 13, 2001, Vol. 6, No. 45 • By JAMES D. MILLER
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I DON’T WANT THE ABILITY to sue my health insurance company. Lawyers are expensive, so if my insurance providers know that I might sue them, they’ll charge me more. Other people, in contrast, might want to pay for the ability to sue. A true patients’ bill of rights would give all of us the choice.

Unfortunately, the congressional sponsors of the patients’ bill of rights now heading for a House-Senate conference this fall seem to have forgotten the difference between rights and obligations. They want to force everyone to pay higher health insurance premiums in return for the ability to sue. But if I hate broccoli, forcing me to buy it increases my obligations, not my rights.

Those who believe that the legal system is an ineffective instrument for resolving disputes between patients and health insurance companies should not be forced to pay higher premiums for the ability to sue our insurance providers. If Congress really cared about rights, it would make the patients’ bill of rights voluntary. Insurance companies could be required to offer some plans that permit consumers to sue them and others that prohibit consumers from suing them. Consumers would then have the right to choose the plan they wanted.

Liberals would obviously object to giving patients the right to be free of lawyers’ fees. The Left would claim that if insurance companies could sell policies that did not provide for the ability to sue, they would do just that, in effect coercing poor or uninformed consumers into forgoing their rights. The Left would also argue that, if given the chance, greedy insurance companies would make it prohibitively expensive to buy a policy that provided the ability to sue.

These arguments would be wrong—precisely because insurance companies are greedy. If it costs, say, $100 to give a patient the right to sue, then a profit-maximizing insurance company will happily provide this right to anyone willing to pay more than $100 for it. Alas, liberals are unlikely to accept any argument based on the assumption that markets work.

To satisfy any genuine objections to making the patients’ bill of rights voluntary, Congress could begin with a limited test. It could allow only a small segment of the population to opt out of the bill’s provisions—only college graduates making over $60,000 a year, say; or it could permit insurance companies to sell such opt-out policies to up to 10 percent of their customers. Allowing even 10 percent of Americans to forgo a patients’ bill of rights would provide a useful market test of the bill’s value.

Normally, it is difficult to determine the cost of governmental regulation. But the difference in the price of health insurance policies with and without the opt-out would quickly reveal the true cost of the patients’ bill of rights. Such a test would also show whether health insurance companies treated those who could sue them differently from those who could not. Would insurers withhold vital treatment from those unable to file lawsuits? Would they practice wasteful defensive medicine on those who could? The number of people who chose to buy insurance without the ability to sue would provide Congress guidance as to whether to make the bill voluntary for everyone. If only a very few people took advantage of the right to opt out, then it would be reasonable to assume that almost everyone would want the right to sue. If most opted out, then it would be obvious that the patients’ bill of rights catered to trial lawyers but not most patients.

As a rule, Republicans tend to incorporate choice in their policies, while Democrats don’t. For example, President Bush’s Social Security proposal would give Americans the right, but not the obligation, to invest part of their Social Security retirement funds in the financial markets. Even though the president, presumably, believes most people would be better off with their funds in the market, he isn’t seeking to force this choice on all. Most Republicans believe that the poor are ill-served by the public schools currently offered them. And Republican proposals on school choice are designed to give the poor the right, but again not the obligation, to send their children to private schools.

It’s easy to see why Democrats want to force all Americans to pay the freight for the ability to sue their insurers. But why are Republicans going along? Shouldn’t they insist on giving citizens the choice of opting out of the patients’ bill of rights?

James D. Miller is an assistant professor of economics at Smith College.