• September 2001

Expanded Health Plan Liability: Undercuts Key Managed Care Reform, Costly for Taxpayers and Employers

Legislative proposals to expand the legal liability of HMOs would cost Massachusetts employers and taxpayers between $138 million and $568 million annually, according to a new Foundation report. The analysis finds that most of the additional costs -- between $117 million and $476 million annually -- would be borne by private employers who provide managed care coverage and by their employees who pay a portion of the premiums. Taxpayers would also bear additional costs -- between $21 million and $87 million a year -- for managed care coverage for Medicaid recipients and for state and local government employees. Unlike the liability legislation enacted in other states, the proposed bills would not require individuals to exhaust internal or external reviews before initiating a lawsuit, an omission that would drive up costs and undercut a key element of the managed care reforms adopted in 2000.