This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Employer Health Benefits
The Kaiser Family Foundation and Health Research and Educational Trust
September 2, 2010
The average annual premiums for employer-sponsored health insurance in 2010 are $5,049 for single coverage and $13,770 for family coverage.
Twenty percent of covered workers are in plans with an annual total premium for family coverage of at least $16,524 (120% of the average premium).
Covered workers on average contribute 19% of the total premium for single coverage (up from 17% in 2009) and 30% for family coverage (up from 27% in 2009).
Fifty-one percent of workers with family coverage pay more than 25% of the total premium.
Among workers with a deductible, the average general annual deductible for single coverage is $675 for workers in PPOs, $601 for workers in HMOs, $1,048 for workers in POS plans, and $1,903 for workers in HDHP/SOs.
For the last two years we have asked employers about changes that they made to their health benefits in response to the poor economy. Among large firms (200 or more workers), 38% reported reducing the scope of benefits or increasing cost sharing, up from 22% in 2009, while 36% reported increasing their workers’ premium share, up from 22% in 2009.
Tracking whether and how worker out-of-pocket costs continue to grow will be an important focus for the survey over the next few years. The slow economic recovery and continuing high unemployment suggests that this trend of increasing out-of-pocket costs will persist, as workers have little clout to demand better benefits or lower costs in the current labor environment.
Full report (226 pages):
By design, the Patient Protection and Affordable Care Act (PPACA) will have the least impact on employer-sponsored health plans. Congress did not want to disturb these plans that seemed to be working reasonably well, in that they covered more of us than all other programs, and were already generously funded with employer contributions. This annual report on employer health benefits is even more relevant this year since Congress, through PPACA, has deemed that we will be living with these plans for decades to come.
The report brings us terrible news. Premiums continue to rise at intolerable rates, and more of the premium costs are being shifted to the employees. Employers also are requiring greater cost sharing on the part of their employees, especially in the form of higher deductibles. Employees are paying more for less protection.
With the poor economy employees need greater relief, yet employers are seeking relief for themselves by placing an even greater financial burden on their own employees.
This is a one-way trend. Employers will continue to seek ways to reduce the costs of their health benefit programs, and an ever increasing amount of the burden will be borne by the employees. Should we really be leaving these decisions in the hands of the employers?
Drew Altman, president and CEO of the Kaiser Family Foundation, said, “The new law helps a lot of people in a lot of ways… but in general it left employer-based coverage alone. That is what the politics of health care dictated and what the American people asked for.” (Kaiser Health News, Sep 2)
If Americans really prefer their employer-sponsored plans, then why are they so relieved when they get to go on Medicare? How much more burden will Americans have to bear before they change the politics and start demanding Medicare for all?
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
By Don McCanne
September 1, 2010
Speaker John Perez of the California State Assembly, on the very last day of the legislative session, pulled SB 810, the single payer bill, from the Assembly floor.
This highly unusual move of pulling a bill that had cleared all legislative hurdles except for the final Assembly floor vote was to protect Democrats from having to cast a health care reform vote in a difficult political environment three months before the next election.
Democrats feared a backlash from those who are opposed to the recently enacted federal health care legislation should they vote for the bill, and they feared offending their progressive base should they vote against the bill. Since a veto by Gov. Schwarzenegger was a given, it was decided that it would be safer to avoid the political risks by simply pulling the bill.
But did they really avoid that risk? Are the single payer advocates expendable? Don’t think so.
Fortunately, Senator Mark Leno is not to be deterred. He has vowed to reintroduce the bill in the next legislative session which begins in January.
The Democrats are worried about their political base, but maybe that’s not the framing we should be looking at. Perhaps the single payer advocates should be reassessing their own base instead.
Not all Democrats have been supportive of single payer, and several Republicans who are not part of the prevailing lock-step bloc do understand the benefits of the single payer model. The Patient Protection and Affordable Care Act is proof that we can’t rely on the Democrats to do the right thing. Most importantly, everyone understands the benefits of Medicare as a social insurance program (even if there is a fringe reactionary element that would emasculate it).
The Tea Party is proving that passionate voices can be heard. Maybe we can learn from them, though our message should contain more than simple platitudes. Our message needs to convey the principled substance of health care justice, and it needs to be loud, clear and highly infectious.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Health Insurer Cash Shifts to Favor Republicans Before Election
By Drew Armstrong
August 26, 2010
Health insurers led by WellPoint Inc. are backing Republicans with campaign donations by an 8-to-1 margin, favoring the party that’s promised to repeal President Barack Obama’s health-care overhaul if it wins back Congress.
WellPoint, Humana, Aetna, Cigna and UnitedHealth Group Inc. have also been considering a $20 million-plus campaign fund to reward friends and punish enemies in Congress. That fund would target vulnerable Democrats who have spoken out against the industry, and would support candidates who are likely to argue for the industry’s positions during future debate on the health overhaul.
With private insurers supporting Republicans by an 8-to-1 margin, there is no question but that the insurers are supporting their own financial interests, regardless of the negative impact on people who need health care.
The Republicans remain opposed to all forms of social insurance that would make health care accessible and affordable for everyone (not that the Democrats did much better this time around). Instead Republicans support measures such as high-deductible health plans, health savings accounts, elimination of mandated benefits such as mental health and maternity care, and promoting interstate sale of less regulated, Spartan plans.
Insurers prefer these plans because they are the most profitable. Many individuals in the large healthy sector of our population tend to prefer these plans because the premiums are lower. Unfortunately for the sick, these plans shift a burdensome amount of the health care costs to the patients in need, not to mention the fact that the insurers have been relatively successful in avoiding these higher-cost individuals in the first place.
Republicans support these proposals because of their ideological stance, believing that each person should be responsible for their own welfare, making exceptions only for those who are the most destitute, not of their own making. They oppose the social solidarity of “collectivist” approaches such as universal insurance programs, whether public or private.
A distinction should be made between the current, lock-step, obstructionist, party-of-NO Republicans, and the nearly extinct species of progressive Republican – many of whom have become independent. It is this obstructionist Republican bloc that serves so well the interests of the private insurers.
It’s sad that the Democrats got into bed with these people. The Democrats ended up supporting the right-wing private insurance model of Mitt Romney and the Heritage Foundation to appease the Republicans and the private insurers. That resulted in the enactment of a terribly flawed program that will not adequately control costs, and will leave tens of millions uninsured and many more underinsured.
The insurers now want to send us more of these reactionary politicians. Aren’t there enough of us who care about the health of all of our people to step up and counter this? Or is it merely all words (for the pollsters), and no action (on behalf of those with health care needs)?
Where are our activists?
By Kip Sullivan
The campaign to create a “public option” ended in failure last March when Congress passed the Patient Protection and Affordable Care Act with no “option” in it.
This failure occurred even though the “option” campaign happily allowed their proposal to be transformed from one that would have taken 130 million customers away from the insurance industry and given the insurance industry no subsidies, to one that took zero to 10 million customers away and gave hundreds of billions of dollars to the insurance industry. Even after “option” advocates had degraded the “option” to a sad little token of a program, Congress refused to incorporate it into PPACA.
There are several useful lessons to be learned from the failure of the “option” campaign. However, you won’t find them in an August 17 article in The American Prospect entitled “Health Reform 2.0” by Jacob Hacker, the most visible scholar in the “option” campaign.
Rather than give us his assessment of what went wrong, Hacker celebrates PPACA and issues recommendations for improving it that are so vague they amount to platitudes. Here are examples:
The following two sentences are the only ones in Hacker’s article that resemble analysis:
[T]he public-option debate was a case study in why cost control is so hard: Conservative Democrats first effectively stripped out the tools of cost control that would have allowed the public option to compete aggressively with private insurers. Then they complained that the public option wouldn’t control costs!
So why were “conservative Democrats” successful in stripping the “option” of its alleged cost-containment tools? Hacker doesn’t say. We may infer from Hacker’s silence that he would prefer his readers not question the decisions the “option” campaign made.
But the decision by Hacker and the leadership of Health Care for America Now (HCAN, the coalition that led the “option” campaign) to abandon single-payer legislation in favor of the “option” on “political feasibility” grounds ought to be questioned. Over the last five years, Hacker has repeatedly argued that single-payer legislation is not “feasible” because the American public is “stubbornly attached” to the current system. By the same logic, he also argued that “option” legislation could pass because it leaves the current multiple-payer system intact.
Here is a particularly condescending example of Hacker’s argument taken from an article he published in 2007 the New England Journal of Medicine in which Hacker criticizes Michael Moore for supporting a single-payer system:
Moore wants to do away with it all. His “prescription for change,” available on the Sicko Web site, calls for giving every U.S. resident “free, universal health care for life” [and] abolishing “all health insurance companies….” Moore clearly does not think much of the health plans being offered by Democratic presidential candidates Barack Obama and John Edwards. The Sicko site directs us to a new vehicle for “netroots” organizing sponsored by Physicians for a National Health Program … which warns, “Beware of Phony Universal Coverage: Many political candidates say they support ‘universal health care,’ but usually this just means making more Americans insurance company customers. Real universal coverage means evicting insurance companies and establishing a national health program instead.” It is an appealing vision, in many ways…. But it is also unrealistic. Sadly most Americans … can be frightened into believing that changing [the current] entrenched and inadequate system means paying more for less.
(“Healing our Sicko health care system,” New England Journal of Medicine 2007;357:733-735, 734.)
Having criticized Moore for being “unrealistic,” Hacker went on to urge his readers to abandon single-payer and support the version of the “option” he was promoting back then, a version he called the “Health Care for America Plan.”
We all know what happened over the next two years. Single payer was taken “off the table” because it was “unrealistic” and an utterly innocuous version of the “option” was placed on the table. But, alas, even this “option” turned out to be “unrealistic,” and so it was also removed from the table. What remained on the table was the centerpiece of what became PPACA – a mammoth insurance industry bailout. The PNHP warning that Hacker scoffed at in 2007 turned out to be 100 percent accurate.
As PNHP had warned, the legislation Obama supported (and that Hacker now celebrates) turned out to be a scheme to turn even more Americans into “insurance company customers.” Under PPACA, the insurance industry will get 20 million to 25 million new customers (16 million directly, and a few more million through the expansion of privatized state Medicaid programs), and the premiums of most of these customers will be subsidized by the taxpayer.
The net result of Hacker’s strategy: A “reform” bill with no “option” and no cost control which will leave half the uninsured uninsured a decade from now and which enriches the insurance industry.
This outcome begs for analysis. The “option” campaign was one of the most well-funded campaigns for a left-of-center proposal in American history (HCAN alone spent at least $51 million over the past two years). Moreover, the campaign took place at one of the more propitious moments for health reform in American history. And yet it failed completely. (This assessment assumes that Hacker and HCAN weren’t all along promoting an insurance industry bailout under the guise of promoting an “option.” I have questioned this assumption in a previous comment on this blog.)
But Hacker offers no analysis other than to blame “conservative Democrats” for whacking his “option.” If it had been a single-payer bill that conservative Democrats successfully opposed in 2009 and early 2010, we know exactly what Hacker would be saying: He would be saying single-payer advocates are “unrealistic” people who don’t understand Americans as well as he does. He would be saying, “Of course conservative Democrats killed the single-payer bill. They represent mainstream Americans who are stubbornly attached to the current system.”
But, of course, it wasn’t single-payer that got killed last year, it was Hacker’s “option” – the completely gutted version – that got killed.
The lesson that Hacker and all of us who care about universal coverage should draw from the “option” debacle is that the “option” never was the Northwest Passage to universal health insurance in America. It will turn out to be more like the Donner Pass – a path that seemed from afar to lead over a mountain range of obstacles, but which turned out to be a trap.
It is imperative that the American universal coverage movement arrive at an accurate interpretation of the history of PPACA, including the “option” campaign’s criticism of single-payer and its support for an insurance industry bailout. The interpretation I hope we all arrive at some day is that the “option” campaign squandered a golden opportunity to achieve real reform or to at least set the stage for the achievement of real reform in the near future.
The year 2009 was one of those rare windows of opportunity for fundamental reform of our health care system. Two-thirds of Americans supported a single-payer system. The nation’s large and seasoned single-payer movement was chomping at the bit to fight for single-payer legislation.
But the “option” campaign squandered it all for an insurance industry bailout. Hacker’s timid and inaccurate analysis of what was possible played a key role in this tragedy.
Kip Sullivan is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program (www.pnhp.org).
Groups Press Congress To End Patients’ Wait For Medicare
By Jessica Marcy
Kaiser Health News
August 27, 2010
Under federal rules, most people with disabilities who are younger than 65 aren’t eligible for Medicare until more than two years after they qualify for Social Security disability income. A coalition of more than 65 organizations led by the Medicare Rights Center has been pushing Congress to do away with the waiting period. But the effort has stalled because of the high cost to the federal government – an estimated $113 billion over 10 years, according to the Congressional Budget Office. That takes into account a $32 billion reduction in federal spending on Medicaid, the state-federal program for the poor and the disabled. Many people with disabilities go on Medicaid while they wait to become eligible for Medicare.
When Medicare expanded in 1972 to cover the disabled, Congress created the waiting period to help control costs and ensure that only people with severe, ongoing disabilities received coverage. About 17 percent of Medicare’s total 47 million beneficiaries – just over 8 million people in 2010 – receive disability benefits, according to the Kaiser Family Foundation.
Still, the patient groups are pushing to end the Medicare waiting period because many people may still need government help. Currently, nearly 39 percent of patients are uninsured for at least some of the time during the Medicare two-year waiting period while 26 percent have no insurance for the entire time.
Discarding the Medicare waiting period “is always going to be an issue in Congress,” said Edmund Haislmaier, senior health policy research fellow at the Heritage Foundation. “Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it’s kind of all-or-nothing because if they did it for some diseases, then they’re immediately going to be inundated with ‘Why didn’t you do it for us?'”
Joseph Antos, health care policy scholar at the American Enterprise Institute, said that a total elimination of the waiting period was not going to happen. “Across the board eliminating the two years just doesn’t seem practical,” he said. “This really is a money issue.”
When Congress expanded Medicare to cover individuals under 65 with long-term disabilities, they specified a two year waiting period to be certain that only those with truly permanent disabilities would be admitted to the program. Obviously this creates a hardship for precisely those for whom the eligibility was established. Will the Patient Protection and Affordable Care Act (PPACA) adequately address this injustice?
PPACA did not include any adjustments in the two year waiting period. Consequently different groups representing specific chronic disorders are lobbying for exceptions to the two year wait. Even if some of these groups achieve legislative success, it will not help the others who must wait the two years.
Since many lose their insurance and their income during that two year wait, some may become eligible for the expanded Medicaid program. Yesterday’s message explained how Medicaid may leave those with chronic disorders underinsured with impaired outcomes, so this is certainly not a satisfactory solution. Besides, many with inadequate incomes may still fall above the threshold for Medicaid eligibility.
For those who lose their insurance during the two year wait, the individual mandate would require that they purchase private plans. Even with premium subsidies, these plans may still not be affordable. Besides, their low actuarial values will not provide adequate protection for these individuals with high health care costs, even with out-of-pocket spending subsidies.
PPACA included the CLASS Act (Community Living Assistance Services and Supports Act) designed to provide long-term care insurance. Though you might think that this provides an out, there are significant problems with CLASS. The program is voluntary and the individual must pay premiums for five years before benefits are available. That alone will exclude those with modest incomes who might consider the premiums to be unaffordable, especially for a program they can’t use for five years and may never need. Furthermore, the benefits are anticipated to be quite meager and likely will provide only a modest daily cash benefit. The CLASS Act will not fulfill the insurance need for the two year gap.
The comments from the representatives of the Heritage Foundation and the American Enterprise Institute describe the real hurdles: politics and money. It’s not that we can’t find the money, but the anti-government politics of today is driven by the philosophy that the government has been drained dry so that no funds are available. That is ridiculous. Our national health expenditures are already adequate, but the funds are inequitably and inefficiently distributed. We need more government involvement, not less, in providing stewardship over our health care funds.
The two year waiting period is yet one more example of the profound injustices inherent in our fragmented, dysfunctional health care financing system – a unsound and iniquitous system perpetuated by Congress through the enactment of PPACA. All of this evil nonsense would go away if they instead would enact a single payer, improved Medicare for all.
Underinsurance among Children in the United States
By Michael D. Kogan, Ph.D., Paul W. Newacheck, Dr.P.H., Stephen J. Blumberg, Ph.D., Reem M. Ghandour, Dr.P.H., Gopal K. Singh, Ph.D., Bonnie B. Strickland, Ph.D., and Peter C. van Dyck, M.D., M.P.H.
The New England Journal of Medicine
August 25, 2010
Recent interest in policy regarding children’s health insurance has focused on expanding coverage. Less attention has been devoted to the question of whether insurance sufficiently meets children’s needs.
We estimated underinsurance among U.S. children on the basis of data from the 2007 National Survey of Children’s Health (sample size, 91,642 children) regarding parents’ or guardians’ judgments of whether their children’s insurance covered needed services and providers and reasonably covered costs. Data on adequacy were combined with data on continuity of insurance coverage to classify children as never insured during the past year, sometimes insured during the past year, continuously insured but inadequately covered (i.e., underinsured), and continuously insured and adequately covered. We examined the association between this classification and five overall indicators of health care access and quality: delayed or forgone care, difficulty obtaining needed care from a specialist, no preventive care, no developmental screening at a preventive visit, and care not meeting the criteria of a medical home.
We estimated that in 2007, 11 million children were without health insurance for all or part of the year, and 22.7% of children with continuous insurance coverage — 14.1 million children — were underinsured. Older children, Hispanic children, children in fair or poor health, and children with special health care needs were more likely to be underinsured. As compared with children who were continuously and adequately insured, uninsured and underinsured children were more likely to have problems with health care access and quality.
The number of underinsured children exceeded the number of children without insurance for all or part of the year studied. Access to health care and the quality of health care are suboptimal for uninsured and underinsured children. (Funded by the Health Resources and Services Administration.)
From the Discussion
We found that inadequate coverage of charges was far and away the most common source of underinsurance. We also found that children enrolled in private plans were more than three times as likely as their counterparts in public plans to have inadequate coverage of charges. This dramatic difference is probably the result of federal rules that permit only very limited cost sharing under Medicaid and modest cost sharing under the Children’s Health Insurance Program.
By James M. Perrin, M.D.
Editorial, The New England Journal of Medicine
August 25, 2010
Health care reform, through the Patient Protection and Affordable Care Act of 2010, may improve access to needed health care services for people with chronic health conditions, including children. Key private insurance reforms, including the removal of provisions imposing lifetime limits or unreasonable limits on annual benefit, the removal of discriminatory premium rates, guaranteed availability of coverage, and dependent coverage for young people up the age of 26 years, may go a long way toward improving coverage for Americans and lowering out-of-pocket costs.
However, the growth in child and adolescent disability, combined with the problem of underinsurance and its effects on the quality of care and access to care, also highlights gaps that will remain in public insurance coverage even after the institution of safeguards affecting private coverage. The basic Medicaid program, unlike Medicare, includes long-term care benefits, such as care at home or in nursing homes and specialized therapies, and it serves as a vital source of financing for nursing home care (about 41% of current total nursing home support). The assumption that most children are healthy, however, has led policymakers to limit long-term care and coverage of a number of other benefits for chronic conditions in other programs for children. SCHIP provided a less generous benefit package — and excluded coverage of services for many chronic conditions (e.g., respiratory therapy, speech and language services, and home-based services) on the basis of the belief that the SCHIP population would not need such benefits. Research conducted since the enactment of SCHIP has indicated that substantial numbers of enrolled children have chronic conditions and could benefit from these services.
The Affordable Care Act calls for a major expansion in Medicaid, especially to provide insurance for a large number of currently uninsured and ineligible adults — that is, those under 65 years of age who have incomes below 133% of the federal poverty line (an estimated 12 million to 17 million people). Here, too, the benefit package will resemble the SCHIP (now CHIP) benefit, with an emphasis on coverage of care for acute conditions and less generous coverage of long-term care. Yet the members of the low-income adult population who will become eligible under this Medicaid expansion include substantial numbers of people with chronic conditions, especially mental health conditions. Here, too, for cases in which long-term care is needed, the Medicaid expansion may leave many newly insured people underinsured. For those instances in which the major epidemics of chronic conditions among adolescents have already begun to affect the young adult population, it is unlikely that many of these young people, even with their new Medicaid coverage, will receive the coverage they need for long-term care.
Being underinsured often results in the same or similar adverse outcomes as not being insured at all. This study demonstrates that the problem of underinsurance amongst children is even more widespread than being uninsured. Does the Patient Protection and Affordable Care Act (PPACA) adequately address this shameful injustice?
PPACA does expand coverage for children through the individual mandate to purchase private insurance, though this study demonstrates that private insurance plans were three times as likely as public insurance plans to have inadequate coverage of charges. Thus PPACA, while reducing the numbers who are uninsured, actually increases the incidence of underinsurance. Most will still be insured through private employer-sponsored plans. For those purchasing their plans through the exchanges, the subsidies will provide some relief but still will not be not adequate to eliminate underinsurance.
PPACA also expands Medicaid, though primarily for adults. Although Medicaid and CHIP cover out-of-pocket expenses better than do the private plans, the editorial by James Perrin explains how lower-income individuals in these programs may still be underinsured. This is particularly true of those with chronic conditions who may need long-term care.
An appropriately designed single payer system eliminates the problem of underinsurance by eliminating significant cost sharing for all appropriate health care services. The efficiencies and policies of the single payer model create enough savings to pay these costs equitably without increasing our national health expenditures.
As long as we remain content with merely tweaking PPACA, we will continue to live in a society that tolerates exposing individuals and families to the hardships created by underinsurance or by having no insurance at all. Certainly we must be a better nation than that.
States Should Structure Insurance Exchanges to Minimize Adverse Selection
By Sarah Lueck
Center on Budget and Policy Priorities
August 17, 2010
The health reform law (the Affordable Care Act) relies primarily on states to establish health insurance exchanges — marketplaces that provide affordable, good-quality coverage options to individuals and small businesses. But it gives states substantial flexibility in how they structure the exchanges.
Adverse selection — the separation of healthier and less-healthy people into different insurance arrangements — will occur if a disproportionate number of people who are in poorer health and have high health expenses enroll in coverage through the insurance exchanges, while healthier, lower-cost people disproportionately enroll in plans offered through the individual and small-business markets outside the exchanges. If that occurs, the cost of exchange coverage will be higher than the cost of plans offered in outside markets. That would drive up costs not only for consumers and small firms purchasing coverage through the exchanges, but also for the federal government, which must provide premium subsidies to enable low- and moderate-income people to afford coverage in the exchanges.
Higher premiums would depress participation in the exchanges by individuals and small businesses, particularly by those people and firms that can obtain better deals in outside markets. That, in turn, could raise premiums even higher in the exchanges and could ultimately result in their failure over time.
Risk Adjustment and Risk Pooling Will Reduce But Not Prevent Adverse Selection
The law also requires use of a risk-adjustment system, in which plans with sicker-than-average overall enrollments receive payments to compensate them for their resulting higher costs. The payments would come from plans that enroll healthier-than-average people that do not cost as much to cover.
As CBO has warned, the inability of current risk-adjustment systems to fully adjust for differences in health care costs between low- and high-cost groups means that, among plans in the same risk-adjustment system, “premiums for enrollees in plans that attract higher-cost beneficiaries [could] rise substantially over time.”
Another potentially helpful provision of the Affordable Care Act requires a “single risk pool,” meaning that each insurer operating inside and outside of an exchange will be required to treat all of its enrollees as a single group when setting premiums.
These pooling requirements, however, have significant limitations — for example, the risk-pooling requirement would apply only to insurers that choose to sell products both inside and outside an exchange. And as noted below, even in cases when insurers do sell products in both markets, it is likely to be difficult to enforce the requirement and ensure that risk is actually being pooled. In addition, the requirement that insurers offering identical plans in both markets charge the same premium in both places is weakened by the fact that the Affordable Care Act does not require insurers participating in both markets to offer the same plans inside and outside the exchange.
Some Elements of the Affordable Care Act Leave Exchanges at Risk for Adverse Selection
Under the Affordable Care Act, the existing individual and small-group markets can continue to operate outside the exchanges. Many of the law’s requirements relating to individual and small-group insurance plans will apply regardless of whether the plans are offered inside or outside the exchanges. For example, all new plans offered — whether through the exchanges or through outside markets — will have to provide a package of “essential benefits” and a minimum level of coverage (as measured by actuarial value). In addition, the law’s new “rating rules,” including those that prevent insurers from charging different prices based on a person’s health status, will apply to new individual-market and small-group plans regardless of whether the plans are offered inside or outside the exchanges.
But various other Affordable Care Act requirements apply only to health plans offered through an exchange, such as requirements related to the adequacy of provider networks, reporting on health care quality, grievance procedures, marketing practices, and benefit design. In addition, the law allows the Secretary of the U.S. Department of Health and Human Services to set additional standards for plans offered through the exchange, which plans sold outside an exchange are not required by federal law to meet.
This leaves substantial opportunity for adverse selection because insurers in these external markets will effectively be competing for enrollees against the exchange plans, but will not have to comply with standards that are as strict. Insurers operating outside the exchanges could seek to take advantage of these looser rules to attract healthier people and businesses, while leaving sicker people to enroll in coverage through the exchanges. As a result, the differences in rules would likely create an unlevel playing field and thereby increase the likelihood of adverse selection against the exchanges unless states institute protective measures.
In addition, under the Affordable Care Act, states have the option of setting up two separate exchanges — one for individuals and another for small businesses. States that do so may find that the exchanges lack the necessary volume to attract a sufficient number of insurers, ensure a large enough pool of enrollees that is well-balanced between the healthy and the sick, and achieve the economies of scale that can keep an exchange’s administrative costs low.
(This paper focuses on the risk of adverse selection between a health insurance exchange and outside health insurance markets. Another type of adverse selection could occur among plans within an exchange; this will be the subject of a future analysis.)
Any health care financing system that divides health care funds into separate risk pools inevitably experiences adverse selection. In fact, private insurers do all that they can to see that their own risk pools contain low-cost healthier individuals while shifting higher-cost individuals into other public or private risk pools. As this article indicates, numerous regulations can be introduced that may reduce the magnitude of these differences, but they can never be eliminated.
When Medicare was financed using a single risk pool, adverse selection did not exist. Once private insurers were allowed to offer options to the traditional Medicare program (Medicare + Choice and then Medicare Advantage), multiple risk pools were established providing an opening for private insurers to game the system – and game it they did. They skirted the rules to selectively market the healthier sector of the Medicare population. They further pushed up their overpayments by upcoding the diagnoses – creating the deception that their enrollees were sicker than they actually were so that they wouldn’t be subject to risk adjustment (adjusting payments to reflect the health status of those in the pool).
Who suffers? Individuals, employers, taxpayers, health care providers. Who benefits? The private insurers.
Adverse selection was not simply an inconvenient policy problem that the legislators had to fiddle with merely because they rejected the concept of a single universal risk pool that eliminates the problem of adverse selection. Far worse, it was a deliberate policy decision supported by the leadership of the private insurance industry who held the hands of the legislators as they led them down the primrose path to the everlasting bonfire that they call reform.
The Center on Budget and Policy Priorities (CBPP) report lists a few policy tweaks that are an attempt to patch some of the loopholes, but there are two major problems with their recommendations.
First, since the insurance exchanges are established on a state by state basis, each and every state must have its own enlightened and caring leadership that would oversee the intensive oversight efforts that will be required to reduce (but not eliminate) these injustices. That will never happen in most states.
The greater problem with the CBPP analysis and recommendations is that they completely excluded any consideration of the solution that really would work – a single universal risk pool through a single payer national health program, such as an improved Medicare for all.
Bill Moyers on John Geyman’s “HIJACKED”
“You think the battle for real health care reform is over? John Geyman says ‘Not on your life!’ And, by the way, your life is what’s at stake. This former Republican country doctor and long-time respected scholar, editor, and advocate for reform that puts the patient, not the industry, first, has issued an informed, convincing, and passionate account of why the battle has just begun, and how we, the people, can win.”
Bill Moyers, author of “Moyers on Democracy”
HIGHJACKED – The Road to Single Payer in the Aftermath of Stolen Health Care Reform
by John Geyman
Everyone needs to read this book. Order your copy now. (I’m ordering ten copies – to share with others.):
Dems retreat on health care cost pitch
By Ben Smith
August 19, 2010
Key White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and the deficit and instead stressing a promise to “improve it.”
The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA.
The Herndon Alliance, which presented the research, is a low-profile group that coordinated liberal messaging in favor of the public option in health care.
Implementing Health Reform: A Communications Perspective
By Lake Research Partners, Greenberg Quinlan Rosner Research, and The Herndon Alliance
August 19, 2010
Challenging Environment (Slide 4):
Straightforward “policy” defenses fail to be moving voters’ opinions about the law.
Public is disappointed, anxious, and depressed by current direction of country – not trusting.
Voters are concerned about rising health care costs and believe costs will continue to rise.
Women in particular are concerned that health law will mean less provider availability – scarcity an issue.
Many don’t believe health reform will help the economy.
Strategic Recommendations: The “Do Nots” (Slide 24):
Don’t assume public knows the health reform law passed or if they know it passed understand how it will affect them
Don’t list benefits outside of any personal context
Don’t barrage voters with a long list of benefits
Don’t use complex language or insider jargon
Don’t use heated political rhetoric or congratulatory language
Don’t say the law will reduce costs and deficit
Herndon Alliance Statement on Politico Story
Our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it. The strategy of informing and educating the public about the law continues to be the right strategy. The Politico story (Aug 19, 2010) is wrong when it says groups supporting affordable health care for the American people are dramatically changing their strategy. There is no reason to do so — our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it. And our research finds that there is a need to cut the political flak and give real information to the public. Americans are tired of the partisan spin that many opponents continue to throw at the health reform law. Hard-working people are thinking about the economy and just want to know how the law will help them and their families. That is what the President and the administration have been doing — it is the approach we support.
The conclusions and recommendations presented during the Families USA conference call were based on polls and focus groups conducted by Herndon’s research partners. In spite of Herndon’s positive spin, the research confirms that the Obama administration and the Democrats in Congress face a very “challenging environment” as they attempt to sell the benefits of the Patient Protection and Affordable Care Act.
Their recommendations for communicating the benefits of reform might best be characterized as “keep it simple, stupid,” relying heavily on personal anecdotes. Don’t confuse the public with the actual policies that are now law, and certainly don’t claim that the law will reduce costs or the deficit.
Many will remember that these are the same partners that pushed the message of choosing your own health plan, while actively suppressing any references to single payer or Medicare for all. They seemed to have the view that the message was of prime importance and policy be damned. Obviously they haven’t changed.
This next time, let’s first define optimal policy (single payer) and then develop a message that fits. As Herndon states, we “need to cut the political flak and give real information to the public.”
Trade group sues over new Calif. insurance rules
By Shaya Tayefe Mohajer
San Francisco Chronicle
August 19, 2010
A new regulation that makes it harder for health insurance companies to drop individual policyholders in California is being challenged in court by an industry trade group.
The California Department of Insurance’s new regulations, which took effect Wednesday, require insurers to investigate the medical histories of those seeking individual policies before accepting any premiums.
The Association of California Life and Health Insurance Companies sued to stop the rules on Monday, accusing the state of acting “in excess of its jurisdiction and authority” by creating regulation that conflicts with the state’s insurance code.
Insurance Commissioner Steve Poizner on Thursday called the lawsuit “shortsighted and morally wrong.”
“Sometimes I think representatives in this industry have their heads permanently stuck in the sand. Illegal rescissions are a repugnant industry practice,” said Poizner.
One of the most egregious offenses of the health insurance industry has been to retroactively revoke an insurance policy after the insured individual files a medical claim, a process known as rescission. Public outrage over this injustice helped to drive the process that brought us the Patient Protection and Affordable Care Act (PPACA).
Apparently the insurance industry has learned nothing. Their trade organization in California has the gall to infuriate all of us by suing to protect their right to do their underwriting after a claim is filed rather than before the policy is issued, whacking the patients when they are down.
Since PPACA will make rescissions more difficult, you would think that the industry would be quiet and accept the inevitable. No. Instead they reveal that they are not simply an amoral industry but rather a truly immoral one by insisting on their right to retroactively deny payment of medical bills run up by the hapless patient, merely to save the costs of timely underwriting.
This is not the industry that should be managing our health care financing. We need our own public financing entity – a single payer national health program.
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