Oh, dear... do I really want to take the time to wade into this on my day off? Hmm... yeah, OK, I'll do it.
(For those of you who don't remember or weren't here last time I waded into the fray, I worked 13 years for Blue Cross Blue Shield. I also have a disabled spouse and a mother with a life-long cardiovascular problem, so I've been on both sides of the fence when it comes to health care insurance.)
1. Freedom to choose what's in your plan
The bills in both houses require that Americans purchase insurance through "qualified" plans offered by health-care "exchanges" that would be set up in each state. The rub is that the plans can't really compete based on what they offer. The reason: The federal government will impose a minimum list of benefits that each plan is required to offer.
This statement ignores two facts:
1) The vast majority of insured Americans do NOT, in fact, "choose what's in their plan". Their
employer chooses, and they're stuck with that "choice". If they are very lucky the employer might give them 3-5 options, but the fact is, they pick from the menu the employer offers. If the employer offers only one choice that's it - that's what you get.
Today, many states require these "standard benefits packages" -- and they're a major cause for the rise in health-care costs. Every group, from chiropractors to alcohol-abuse counselors, do lobbying to get included. Connecticut, for example, requires reimbursement for hair transplants, hearing aids, and in vitro fertilization.
And why
shouldn't hearing aids be covered?
Hair transplants and in vitro fertilization I have issues with. However, you have to ask - what limits (if any) are on these services? Is it hair transplants for normal male-pattern baldness or hair transplants for burn and trauma victims? If the latter, it's more like mandated breast reconstruction for cancer patients than toupee replacement. I am personally opposed to public funding of assisted reproduction, but if that is what it takes to get everybody covered by real health insurance I can live with a compromise. There WILL have to be compromise to get this done.
The Senate bill would require coverage for prescription drugs, mental-health benefits, and substance-abuse services.
These are somehow bad things? How so? This is
already required by some states! Why
wouldn't we cover prescription drugs, mental-health benefits, and substance-abuse treatment? It's like bitching we cover broken legs!
It also requires policies to insure "children" until the age of 26.
A damn good idea, too, as that is one of the demographics most prone to accidental injuries.
That's just the starting list. The bills would allow the Department of Health and Human Services to add to the list of required benefits, based on recommendations from a committee of experts. Americans, therefore, wouldn't even know what's in their plans and what they're required to pay for, directly or indirectly, until after the bills become law.
And right now every damn state in the union can do the
exact same thing - so how is this different? How do you think mandated coverage for various items
happened?
As with the previous example, the Obama plan enshrines into federal law one of the worst features of state legislation: community rating. Eleven states, ranging from New York to Oregon, have some form of community rating. In its purest form, community rating requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition.
And yet the insurance industry has not imploded. Know what? Some states require "community rating" for some other forms of insurance, too. Yet, the industry survives. Huh.
Americans with pre-existing conditions need subsidies under any plan, but community rating is a dubious way to bring fairness to health care. The reason is twofold: First, it forces young people, who typically have lower incomes than older workers, to pay far more than their actual cost, and gives older workers, who can afford to pay more, a big discount. The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured.
Given that the young have the
lowest premiums of anyone I'm not sure how you can argue they're getting "gouged". Or, if you do, then you have to admit everyone else is getting gouged
worse.
Under the Senate plan, insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage. So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.
Uh, yeah... that's sort of how insurance
works.
Second, the bills would ban insurers from charging differing premiums based on the health of their customers. Again, that's understandable for folks with diabetes or cancer. But the bills would bar rewarding people who pursue a healthy lifestyle of exercise or a cholesterol-conscious diet. That's hardly a formula for lower costs. It's as if car insurers had to charge the same rates to safe drivers as to chronic speeders with a history of accidents.
I'm old enough to remember when all men in the US were charged higher rates for car insurance than women. Why? Because men get in more car accidents. Then it was decided this was discriminatory and the practice was banned, auto insurance premiums no longer differ due to gender. Yet the auto insurance industry still survives.
It also plays into the assumptions that by 'living right" one can truly avoid chronic health problems. You know, my mom exercised daily (until she was physically no longer able to) and ate right - but she still had debilitating heart disease. Why? It was genetic - she was going to have heart disease
no matter what she did. So, while pursuing a "healthy lifestyle" might have benefits for her, it did jack to keep her medical costs cheap. I have a sister who inherited the same condition. She is
fanatical about exercise, healthy eating, taking her medications.... she still has heart disease. Granted, it's not
as bad as mom's was at her age, not nearly so, but she's already cost money and there wasn't a damn thing she could do to prevent it. So this is just another way of saying "the sick/chronically ill must have done something wrong and
deserve to be sick" just as so many conservatards think the poor
deserve to be poor and should be punished for lack of money.
3. Freedom to choose high-deductible coverage
The bills threaten to eliminate the one part of the market truly driven by consumers spending their own money. That's what makes a market, and health care needs more of it, not less.
Let's ignore the fact that many people with a HDC/HSA were
forced into it either because that's all their employer offered, or they were dumped into the "individual policy" market and that's all they could
afford to buy. That's like saying everyone has the freedom to sleep in a cardboard box under the freeway overpass, not just the homeless.
Hundreds of companies now offer Health Savings Accounts to about 5 million employees. Those workers deposit tax-free money in the accounts and get a matching contribution from their employer. They can use the funds to buy a high-deductible plan -- say for major medical costs over $12,000. Preventive care is reimbursed, but patients pay all other routine doctor visits and tests with their own money from the HSA account. As a result, HSA users are far more cost-conscious than customers who are reimbursed for the majority of their care.
1) Remember - the
employer chooses to offer a plan to the employees, the employees get
no say. Therefore, it is eroneous to say these workers are "free" to choose a HDC/HSA or that they have a "choice".
2) The matching contribution from the employer is
entirely voluntary. The employer is
not obligated to do this, and in fact, more and more don't as a "cost saving" measure.
3) Most such plans I've seen didn't kick in until FAR past $12k. Granted, I was laid off two years ago and things might have changed, but clearly the author of this article is engaged in some biased reporting here.
4) HDC/HSA "customers" are more cost-concious because they have no choice - but they ALSO spend a shitload more time dealing with billing and, if they're smart,
negotiating with providers to reduce their bills. Me, I came out of the Evil Insurance Empire and knew I could negotiate and I had a fuck of a hard time coping with it - it is ludicrous to think the average consumer, no matter their education and competence in other areas of life, is really equipped to handle this. Hell, a lot of people don't even know they
can negotiate some of these costs!
The other aspect to the negotiating game is unspoken: if you are
entirely without insurance, that is,
have none at all, it is fairly common that you can bargain down to a 40-50% reduction in "retail" price on medical items. It's true, I've done it (even mentioned it in a few past threads).
However, for many of those same providers, if you have ANY insurance at all, ANY, their policy requires them to charge you full retail price if you have an HDC/HSA. That means you could, potentially, be
even worse off under an HDC/HSA than if you had
no insurance at all - because with an HDC/HSA you are forced to not only pay a premium for insurance that won't kick in unless things are truly dire, but you ALSO are paying full retail for medical care, whereas with no insurance whatsoever you can often chop the prices in half AND there are charity programs open to you that no one with insurance has access to.
The bills seriously endanger the trend toward consumer-driven care in general.
This is code for "we can't force people to pay for whatever shit policy their employer decides to give them anymore".
By requiring minimum packages,
That, we must note, are ALREADY required by many states --
they would prevent patients from choosing stripped-down plans that cover only major medical expenses.
Which are a bad fucking idea in the first place and which many of those people are "choosing" ONLY because they have no alternative.
"The government could set extremely low deductibles that would eliminate HSAs," says John Goodman of the National Center for Policy Analysis, a free-market research group. "And they could do it after the bills are passed."
So fucking what? HDC/HSA's are
new, less than 10 years old. The ONLY reason they have 5 million customers (that's what, a piffling 2.5% of the population compared to
1 in 6, or about 15%, having no insurance at all?) is because so many employers switched to them because of lower costs, thereby FORCING many of those 5 million into those plans!
The legislation divides the insured into two main groups, and those two groups are treated differently with respect to their current plans. The first are employees covered by the Employee Retirement Security Act of 1974. ERISA regulates companies that are self-insured, meaning they pay claims out of their cash flow, and don't have real insurance. Those are the GEs (GE, Fortune 500) and Time Warners (TWX, Fortune 500) and most other big companies.
That's because you need to be fucking big in order to self-insure - otherwise your risk pool isn't big enough.
The House bill states that employees covered by ERISA plans are "grandfathered." Under ERISA, the plans can do pretty much what they want -- they're exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states.
That's actually largely true right now. On the other hand, those very companies frequently have relatively generous plans. Why? Because they have huge risk pools, which lowers the
average cost per individual. Which, to my mind, is an argument to make a risk pool of 300 million people, but no one asks me how to run the country, do they?
The bill gives ERISA employers a five-year grace period when they can keep offering plans free from the restrictions of the "qualified" policies offered on the exchanges. But after five years, they would have to offer only approved plans, with the myriad rules we've already discussed. So for Americans in large corporations, "keeping your own plan" has a strict deadline. In five years, like it or not, you'll get dumped into the exchange. As we'll see, it could happen a lot earlier.
But let's gloss over the fact that the
fucking Federal government even offers an HDC/HSA option! So... why assume the Feds hate the option so much?
The outlook is worse for the second group. It encompasses employees who aren't under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only "qualified" plans to new customers, via the exchanges.
This, of course, ignores the fact that insurance companies ALREADY have minimum requirements! And mandates!
The employees who got their coverage before the law goes into effect can keep their plans, but once again, there's a catch. If the plan changes in any way -- by altering co-pays, deductibles, or even switching coverage for this or that drug -- the employee must drop out and shop through the exchange. Since these plans generally change their policies every year, it's likely that millions of employees will lose their plans in 12 months.
Millions of employees lose their plans every damn year RIGHT NOW due to layoffs, their employer changing insurance providers, or dropping insurance coverage altogether. Where the fuck do people think 46 million uninsured people come from?
The Senate bill requires that Americans buying through the exchanges -- and as we've seen, that will soon be most Americans -- must get their care through something called "medical home." Medical home is similar to an HMO. You're assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.
Of course, let's just
ignore the fact that even people with PPO's are
limited to the list of doctors provided by their
insurance company!
Let's also ignore that, under
every HMO policy I've seen
no one is "assigned" a doctor. You are given a LIST of doctors and you pick one. Even the heavily subsidized, not popular with doctors (due to low reimbursement) plan I'm on
right now offers a LIST of doctors that we can choose from.
The bills do not specifically rule out fee-for-service plans as options to be offered through the exchanges. But remember, those plans -- if they exist -- would be barred from charging sick or elderly patients more than young and healthy ones. So patients would be inclined to game the system, staying in the HMO while they're healthy and switching to fee-for-service when they become seriously ill. "That would kill fee-for-service in a hurry," says Goodman.
1) Almost NO ONE has true fee-for-service any more - the author is attempting to conflate "fee-for-service" (FFS) with "perferred provider option" (PPO). FFS means ANY doc you choose the insurance company will pay for - ANY doc, ANYWHERE. PPO means "choose from this list we give you".
2) The health insurance industry screamed bloody murder when they were no longer permitted to
deny coverage to anyone in Illinois. "Oh noes! We're doomed!" No, they weren't. Same shit for the charging the sick and elderly more - who, by the way, are the people
least able to pay. Which is, of course, how they deny people coverage now. They simply raise the premiums to the point they're unaffordable. That's how my Other Half went from "uninsurable" to "insurable at $1,200 per month". Yeah, THAT was a big fucking help!
In reality, the flexible, employer-based plans that now dominate the landscape, and that Americans so cherish, could disappear far faster than the 5 year "grace period" that's barely being discussed.
And good riddance, I say - people have been eating cardboard and shit for so long they've forgotten what food tastes like. So to speak.
The best solution is to move to a let-freedom-ring regime of high deductibles, no community rating, no standard benefits, and cross-state shopping for bargains (another market-based reform that's strictly taboo in the bills). I'll propose my own solution in another piece soon on Fortune.com. For now, we suffer with a flawed health-care system, but we still have our Five Freedoms. Call them the Five Endangered Freedoms.
Except, of course, for those who have
no health insurance at all, or who have
no choice at all - the only thing they're free of is reliable health coverage.
I'll save my comments on other people's posts for my next post.
