Still reeling after the fight over HIPAA Privacy Regulations, advocates of pro-market reforms are assessing the potential impact of the Senate Patients� Bill of Rights. At this writing, the House has yet to pass a companion bill to send to Conference. Should the House fail pass a companion bill, the Kennedy-McCain-Edwards bill will arrive at President Bush�s desk virtually intact.

Obviously, it is our hope that the President vetoes the bill. As the days pass and �unnamed high ranking officials� continue their leaks to the press, it seems likely that the President will sign whatever he is given.

Meanwhile, ERISA lawyers and federalism experts are analyzing the Kennedy-McCain bill, looking for an angle worthy of a court challenge. The pro-market advocates from think tanks, taxpayer groups and conservative organizations are actively lobbying the House of Representatives to pass the Fletcher-Johnson-Peterson bill, send it to conference and (hopefully) water down the damage of the Kennedy bill.

How did we get here?

Eight weeks ago, it seemed quite likely that the HMO reform bill to emerge from the Senate would be the Breaux-Frist-Jeffords bill. It capped damages at $500,000 and established an adequate external review process aimed at keeping frivolous suits from clogging the courts. There were also sufficient protections in place to shield employers from liability.

In short, it was not a perfect bill but at least one we could live with. It was endorsed by wide range of medical, business, advocacy and other non-profit organizations. It seemed inevitable.

Several things happened. First, the trial lawyers began pouring more money into issue advocacy campaigns targeted at critical swing votes. They would have been foolish not to; if you were an ambulance chasing trial lawyer, would you rather take one third of $500,000 or $5,000,000?

Second, Senator John McCain (R-AZ) offered an amendment (designed to appease conservatives) containing pro-MSA language. While it failed to earn the PBOR any new endorsements, it did blunt the edge of conservatives� criticism.

Third, Democrats effectively used the argument that the rest of America should have the same protections as Texans, a reference to the Texas version of the PBOR that (then) Governor Bush had signed. What they failed to mention was that the Texas bill offered reasonable employer protections as well as damage caps.

Finally, the White House blinked. While Bush was denouncing the $5,000,000 damage cap in the Kennedy-McCain bill and threatening to veto it, White House policy aides were lobbying Senators to dilute it through conciliatory amendments. This mixed message served only to confuse moderates and undermine the Republicans� strategy.

Meanwhile, Minority Leader Trent Lott (R-MS) was attempting to advance the Administration�s energy proposal and Majority Leader Daschle was threatening to keep the Senate in session through the traditional Fourth of July recess unless the Kennedy bill was passed. We cannot determine the exact nature or extent of any trade-offs, but it seems obvious that more was at play than the bill at hand.

JUST HOW BAD IS IT?

My ally Dr. Robert Moffit quite succinctly describes the highlights (or lowlights, if you will) of the Kennedy-McCain bill in the column posted in the August 2001 issue of AAPS NEWS. I agree that the silver lining may prove to be a rise in the number of defined contribution plans in the marketplace. Freedom of consumer choice, the ability to negotiate prices and portability are integral to defined contribution plans and a boon to free market advocates. Of course, here maybe obstacles in terms of availability and affordability in some states.

While I�ve advocated MSAs since 1993, I do not believe that the Kennedy-McCain MSA provision is going to inspire insurers to launch new products into the marketplace. State regulations and, ultimately, the tax treatment of MSA funds must be addressed before insurers make a long-term commitment to public education and product advertising on a national basis.

The number of uninsured is the core of any argument for a greater government role in health care delivery. If the Kennedy-McCain bill is enacted (without a strong, mitigating House bill) we will see a dramatic rise in the number of the uninsured. As long as insurance is offered through an employer-based system, employers will be liable to varying degrees, however House Republicans attempt to blunt the effect. Why should employers expose themselves to any degree potentially bankrupting liability?

It is far simpler to not offer any benefits, or offer employees money to take care of insurance issues on their own time. Of course, third party benefits administrators may take on a greater role under a Kennedy-McCain scenario, and one can be certain that another layer of bureaucracy will only exacerbate the situation.

Perhaps Senator Kennedy will have a bill to remedy that situation in the next session.