Bush encourages moderates to find compromise on patients' rights

By Ian Christopher McCaleb
CNN Washington Bureau

WASHINGTON (CNN) -- The Senate killed off a Republican move Tuesday to shield employers from lawsuits over health coverage, but behind-the-scenes dealing could yield a compromise on patients’ rights within the next few days.

As supporters of the patients' rights bill were shooting down the amendment, President Bush was on the phone with several moderate senators, encouraging them to find a compromise on the issue and send him a bill he can sign.

The chamber spent the early portion of Tuesday debating a vital change to the bill championed by the majority Democrats – a bill the GOP would like to defang before the House of Representatives gets its say on the issue later in the summer.

VIDEO Republicans in the U.S. Senate failed to drop employer liability from patients' rights legislation. CNN's Kate Snow reports (June 26) Play video (QuickTime, Real or Windows Media) CNN's Patty Davis says the U.S. Congress is under siege from both sides of the patients' rights issue (June 25) Play video (QuickTime, Real or Windows Media)   MESSAGE BOARD Health care reform     RESOURCES Big Picture: Debate begins on a Patients' Bill of Rights   Comparison: Patients' Bill of Rights     EXTRA INFORMATION Patients' Rights     ALSO Senator Debbie Stabenow and Tricia Luker on the Patients' Bill of Rights     CNN ACCESS HMO reform: Good for consumers or lawyers?

The amendment -- similar to provisions of a patients’ bill of rights enacted in Texas -- would have blocked lawsuits against employers when the treatment decisions of insurance providers and health maintenance organizations are challenged by patients in court.

The amendment, presented by Texas’ two Republican senators, Phil Gramm and Kay Bailey Hutchison, failed on a 43-56 vote just after noon.

Gramm and many of his Republican colleagues have argued employers should not be held liable if the insurance organization or health provider in their employee benefits package denies an employee a needed medical procedure.

Democrats said the number of employers that would be exposed to suits under their bill would be small because very few employers take an active role in deciding the treatments their employees receive.

Republicans countered that the Democratic bill – presented by Sens. John Edwards of North Carolina and Edward Kennedy of Massachusetts, with assistance from Republican John McCain of Arizona – contains page after page of provisions opening all employers to the risk of legal action.

"There is indeed extreme exposure as far as employers are concerned," said Sen. Fred Thompson, R-Tennessee. "By definition of applicable law, employers are supposed to have control over these health plans."

Added Sen. Don Nickles, R-Oklahoma. "If you read their bill, employers beware -- you’re going to be sued."

Republicans argued that could drive up premiums for individual beneficiaries and result in some small businesses dropping insurance benefits altogether -- adding another 1.2 million to the number of uninsured U.S. workers, Thompson said.

Kennedy returned fire, saying employers establish a trust with their employees when they set up insurance plans for them. Democrats, including the bill's sponsors, have provided many examples of employers cutting off health coverage if their employee suffers some sort of costly, catastrophic injury.

Texas Sen. Gramm believes employers need to be protected against insurance companies which deny medical procedures for their employees

"This is in place for those occasions when an employer or HMO [doesn’t] live up to the commitment to that patient when they sign up and start paying the premiums," Kennedy said.

With the Gramm amendment dispatched, the door is now open for a compromise, under development by Republican moderate Olympia Snowe of Maine, that would block lawsuits against employers if the employer specifically waives all rights to participate in medical decisions made for its employees.

Snowe has approached the White House about the compromise language and has received a favorable response, although she pointed out Tuesday that talks are only in their preliminary stages.

President Bush has threatened to veto the bill if it reaches the Oval Office in its current form.

Several moderate senators, including Snowe, said Tuesday they received calls from Bush encouraging them to find a compromise on the issue of how vulnerable employers should be.

Sens. Ben Nelson, D-Nebraska, and Mike DeWine, R-Ohio, both said they have spoken to the president.

"He encouraged me to continue to work with others to try to improve this bill, and I told him I intend to do it," DeWine said, adding Bush encouraged him to try to find a compromise on other contentious areas of the bill.

The congressional debate threatens to stay contentious, even if the bill emerges from the Senate intact. The House may soon produce its own bill that would allow patients to sue their health providers in state courts – a venue generally thought to favor higher awards than federal courts. The Democratic bill in the Senate has similar provisions.

Republicans in the Senate are supporting a rival bill that would only allow suits to be heard in federal courts and would set a ceiling for cash awards. That bill, produced by Republican Bill Frist of Tennessee, Democrat John Breaux of Louisiana, and independent Jim Jeffords of Vermont, is favored by the Bush White House.

Also Tuesday, the Senate defeated an attempt by GOP Sen. Charles Grassley of Iowa to have the Edwards-Kennedy-McCain bill sent back to the Senate Health, Education, Labor and Pensions Committee for further revisions.

Grassley’s move fell on a 39-61 vote.

CNN Capitol Hill Producer Dana Bash contributed to this report.