So what does this vaunted increased choice, as claimed by the insurance industry, look like? Is it a choice of plans that offer financial security against the cost of major illness or injury, as should be the goal of insurance? These examples belie that premise:

The trend in employer-sponsored health insurance (ESI) is to cover fewer people with less coverage all the time, and to eliminate coverage for retirees if at all possible (eg., the auto industry)

Even when covered, there are many circumstances where enrollees’ choices are minimal or non-existent, such as when their health plans make changes in network providers and hospitals, when plans withdraw from the market, or when lock-in rules restrict them from making changes at their own option

If one loses ESI, there is little recourse for many in the individual market, as these examples show:  because of pre-existing conditions, many applicants are rejected for coverage; many who are not rejected cannot afford the premiums, which are one and a half times higher than the usual costs of ESI coverage; if one loses one’s job, COBRA guarantees coverage for another 18 months, but only one –quarter of those people can afford continued coverage.

The Boston-based Access Project, a non-profit resource center working to improve health and health care access since 1998, recently conducted in-depth interviews with 45 people in seven states who had  accrued medical debt while being privately insured.  They found that only one-half of interviewees who had ESI were offered any choice of plans; even if they had a choice, they tended to choose a plan with the lowest premium because that was all they could afford, even though they felt vulnerable to increased out-of-pocket expenses.

The insurance industry has trotted out a growing number of limited benefit policies (LBP’s) in recent years; do they offer useful choices? Here are two examples of heavily marketed plans at the moment: large employers such as Wall Mart, McDonalds and Lowe’s, often have annual caps of coverage as low as $1,000 to $2,500; Aetna’s Affordable Health Choices caps hospital benefits at $2,000 and accident/ER benefits at $1,000. Is this what market advocates have in mind about choice?

The health insurance industry is actually much more consolidated than we might think; the American Medical Association has found that private insurers have near-monopolies in 95 percent of HMO/PPO metropolitan markets; many of these markets have triggered antitrust concerns by the Department of Justice; as the accompanying graphic shows, a few insurers dominate the market in most states

The trends are obvious for the private health insurance industry – less coverage all the time for more money.  It is a failed industry, though many have not yet recognized it (Wall Street is beginning to have concerns about its future). It succeeds only as long as its enormous administrative and overhead costs are paid by consumers convinced that their “choice” offers more value. All trends indicate, however, that it is an unsustainable industry. The sooner that Americans realize that, the better, since we have another, better choice as to how to finance health care – a single-payer public financing system with one big risk pool, combined with our private delivery system.

Adapted from Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, forthcoming, August 2008 by John Geyman. With permission of the publisher, Common Courage Press.

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As we saw in our last post, the health insurance industry claims, through AHIP, its national trade group, “to expand access to high-quality, cost-effective health care to all Americans.” Let’s examine how well the industry does in meeting that goal.

For many, it’s hard to imagine that at one time health insurance really did assure access to care. Yet at one time, in the early years of the industry, people were insured without regard to pre-existing conditions or their claims experience. Prior to the 1960s, such medical underwriting practices were considered unethical. Reasonable coverage was provided to all comers for community-rated premiums. Today, most insurers try to select healthier enrollees and avoid exposure to higher-risk enrollees and their higher costs of care. To find the last time Americans could depend on health insurance to assure access to care, one has to go back in history at least 40 years; those days are long gone.

The track record of the industry makes it obvious that it can never expand access to care for all Americans. How can AHIP leaders keep a straight face in continuing to proclaim such a mission in view of these inconvenient facts?

• Of 300 million Americans, 47 million are uninsured and tens of millions underinsured with little protection against the costs of significant illness or injury.

• Employer-sponsored insurance (ESI), once a mainstay of coverage for working Americans, now covers less than three of five workers; more than one-half of small employers no longer offer their employees either health insurance coverage or benefits toward purchasing coverage.

• Even when insured, one-half of women between 19 and 64 years of age spend more than 10 percent of their income on out-of-pocket health care expenses. According to a recent analysis by the Henry J. Kaiser Family Foundation, seniors with supplemental Medigap policies actually spend more of their income on premiums and health care than any other group of seniors, including those with traditional Medicare without Medigap coverage.

• As private insurance markets continue to shrink, the industry turns to generously subsidized public markets; however, growth there is limited by its high costs and is only possible when the government hands out large subsidies (private Medicare Advantage plans, for example, receive subsidies 12 to 19 percent above the costs of traditional Medicare).

These inconvenient truths expose the industry’s goal of expanding access to care as just one more example of self-serving rhetoric without any basis in fact. Just what do we get for continuing to prop up this industry? That’s the subject of the next post.

Adapted from Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, forthcoming, August 2008 by John Geyman. With permission of the publisher, Common Courage Press.

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