Thomas is the Canary in the Health Care 'Coal Mine'
Today (January 24) Physicians for a National Health Program and California Nurses Association/National Nurses Organizing Committee held a press conference at the National Press Club in Washington, uniting in a call for national health insurance.
Nathan Wilkes, a computer network engineer from Colorado, provided a few comments at that press conference. He represents the American dream. He has a great family and an excellent job that provides him with the protection of the best that private insurers have to offer. The story of his son, Thomas, should make us question whether the private insurance industry can ever provide the level of protection against medical debt that we all should have. Following are excerpts from an essay that Nathan wrote about their experiences.
Problems with and solutions for the current system of employer-sponsored health care in the United States
By Nathan J. Wilkes
January, 2007
Meet Thomas.
Thomas is only three years old. By most accounts, he is your typical three-year-old — learning his alphabet and numbers, infatuated with Spider-Man, and constantly finding new ways to get in trouble.
But, by fate and circumstance, he is more than that. Thomas is the Canary in the Health Care ‘Coal Mine’.
When Thomas was born in 2003, he was diagnosed with Severe Hemophilia A, a genetic blood-clotting disorder caused by a lack of “Factor VIII” that prevents his body from creating clots when he sustains injury.
In the three years of Thomas’s life, our family has been exposed to the harsh realities of health care in Colorado and the US. Through my experiences with employer-based health care, providers (doctors, hospitals, emergency rooms), insurance companies, advocacy groups, legislative bodies, non-profit groups, and peers in the hemophilia community, I have witnessed first-hand what happens when the fundamental basis of providing health care coverage is deeply flawed and so-called “reform” actions are nothing more than attempts to increase the profits of special interest groups.
I helped build a local high-tech company (Virtela) from the ground up. I am currently the 4th most senior employee based on longevity, and the most senior engineer.
Managing expenses such as health care for employees has not been easy. Because of the risk associated with joining a start-up company, it was imperative that Virtela offer a comprehensive benefits package, including health insurance, stock options, and competitive salaries. As a result, employees enjoyed health insurance with no deductible, no copayments, affordable prescriptions, and reasonable premium expenses.
Over the first several years, we witnessed moderate increases in premium costs. As an employer of about 100 people, we fit into the large-group insurance category. If we didn’t like the premiums we were offered upon renewal, we went to bid and shopped around for competitive insurance rates. As a result, we had three different providers over the first three years, switching to preserve benefits while keeping premium costs down (or at least not rising as fast).
In 2004, we saw modest increases in premiums and greater shift of premium costs onto employees through higher copays.
In early 2004, Thomas developed an inhibitor to his factor replacement therapy. Without going into the details, an inhibitor meant that his body developed an immunological response to the life-saving factor treatments that normally allowed his blood to clot if he had an injury.
When Virtela went to renew its insurance at the end of 2004, it faced an unprecedented dilemma. Because of claims history, we faced a nearly 40% increase in premiums. As a new company struggling to reach profitability, there was no room in the budget for the company to cover the difference. Rather than pass the costs on to the employees, who no doubt couldn’t afford to absorb this increase either, the contract was put out to bid again, like had been done many times before. There was a difference this time. Because of prior claims and a lack of guarantee-issue for large-group coverage, every insurance company refused to bid on our business. United Health Care, thanks to guarantee-renewability, was our only option for insurance and we were stuck with the premiums they dictated.
Virtela then worked with United Health Care and a broker to try and craft an affordable solution. The only solution that fit in the company’s budget was migrating from the original PPO plan to a High Deductible Health Plan. By coupling the HDHP with a Health Savings Account, Virtela was able to pay the premiums for which they had budgeted. The increase was still passed on to the employees, but in the form of HSA contributions that were voluntary. Some employees chose the HSA and struggled to find the budget to fund it. Some employees chose the HSA and didn’t fund it fully because it wasn’t in their budget to do so yet.
In 2005 and 2006, Thomas’s treatment didn’t change much. Claims were about $750,000 for each year. What did change were our benefits. Every other insurance company again refused to bid on our business. At the end of 2005, we faced another premium increase of over 55%. The only way to lessen the burden was to accept some very troublesome changes to the benefits. The out-of-pocket maximum increased from $4,000 to $8,000. Prescriptions after the deductible was met went from 100% coverage to $10-$50 each. Most troubling of all, a $1 million lifetime maximum was introduced. The direct effect of this cap was to weed out high-cost plan participants like my son.
When lifetime capitation was first introduced by the insurance industry in 1970, $1M was a common standard. A $1M lifetime cap in 1970, adjusted for inflation, should be close to $20 million today, yet a $1M cap is still the norm and now woefully inadequate.
In 2006, Thomas’s claims were about $800,000. Premiums for 2007 increased yet again. Benefits were further limited by increasing the deductible from $4,000 to $6,000 and out-of-pocket annual maximum from $8,000 to $10,000 for family coverage. It is now officially impossible for a new employee making maximum allowable contributions to his HSA to match the new deductible in a year’s time.
The introduction of the cap for the 2006 plan started a timer that couldn’t be reversed. By the time we hit the cap, I would have to make a critical decision. In order to not fall into a “pre-existing condition” category with my son’s hemophilia, I would have to find some way to maintain private insurance coverage when the cap was exhausted.
Over the next couple of months following the introduction of the lifetime cap, I searched and searched for a solution.
(He lists six options, each with its own problems.)
7) Change the world. Lobby for single-payer, single-risk-pool, universal-access coverage like that proposed by Physicians for a National Health Plan and many others. This is the only option that addresses the real problems of health care costs, access to care, and social responsibility while remaining fair and making economic sense.
Press release - PNHP and CNA/NNOC:
http://www.pnhp.org/news/2007/january/physicians_and_nurse.php
Comment:
By Don McCanne, MD
The private insurance model is fundamentally different from a universal, publicly-funded social insurance model. The former works well for the healthy, but not so well for the sick and injured; the latter always works for everyone. When will the nation finally learn this lesson?