Medical Debt and Access to Health Care
Prepared by Catherine Hoffman, Diane Rowland and Elizabeth C. Hamel
The Kaiser Commission on Medicaid and the Uninsured
September 2005

Health insurance alone is no longer a guarantee of financial protection from the costs of health care for many. Today’s higher premiums, deductibles, and copayments can create a substantial financial burden for families and many learn only through an unexpected serious injury or illness that they are not well protected financially.

In this study… we found that one in six adults who are privately insured – 17.6 million adults – report having substantial problems paying their medical bills.

Privately insured adults with medical debt are largely from middle-class families, not as poor as the uninsured, but not as well-off as the privately insured who have no medical debt. The large majority hold full-time jobs. An important difference between the privately insured with vs. without medical debt is their health status. Those with medical debt are more than twice as likely to report being in only fair or poor health and they are almost twice as likely to have an ongoing or serious health problem compared to others with private coverage.

Perhaps not surprising, the majority of those with medical debt reported underestimating what their health plan would pay towards their medical bills (vs. a third of those without sizable medical debt) and nearly half said their plan had not paid anything for care they thought had been covered.

If current trends in greater cost-sharing continue, more low- and middle-income families with private insurance, particularly those who are in less than good health, will not have the same access to care as others with private coverage who have higher incomes. In fact, as this study shows, they will limit their care in many of the same ways and as often as those who have no health insurance at all.

http://www.kff.org/uninsured/upload/Medicaid-Debt-and-Access-to-Health-Care-Report.pdf

Comment: Monotonous, isn’t it – study after study demonstrating that private health insurance is no longer serving its purpose – to ensure financial security for those who have health care needs.

Current insurance innovations are designed to make premiums affordable, and they do this by making access to care unaffordable. The insurers are not going to fix this broken system for us. Isn’t it time that we gave up on them?

Medicaid Responsiveness, Health Coverage, and Economic Resilience:
A Preliminary Analysis
By Stan Dorn (The Economic and Social Research Institute), Barbara Markham Smith (Health Policy Innovation, Inc.) and Bowen Garrett (The Urban
Institute)
The Health Policy Institute of the Joint Center for Political and Economic Studies
September 27, 2005

With $10 billion in Medicaid spending reductions under consideration by Congress, the issue of Medicaid has returned to the forefront of the nation’s public policy debate. One recurring proposal to limit federal Medicaid spending would place firm caps on either Medicaid enrollment or federal Medicaid spending.

Such caps could dramatically restructure the program. Currently, individuals who meet their state program’s eligibility requirements are guaranteed coverage. Accordingly, when changed economic conditions increase the number of people who qualify for Medicaid, enrollment automatically rises. This capacity to expand in response to need has prevented millions of Americans from losing coverage in recent years. From 2000 to 2004, enrollment in employer-sponsored insurance (ESI) fell from 63.6 percent to 59.8 percent of all U.S. residents. Many workers who lost ESI became uninsured, but others instead qualified for Medicaid. If Medicaid had not been allowed to grow, and enrollment was instead capped at 1999 levels, the number of uninsured in 2004 would have been 6 million higher – roughly 52 million, rather than the 46 million estimated by the Census Bureau several weeks ago.

If health insurance premiums continue to grow much faster than total earnings, the next few years are likely to see further declines in employer-sponsored coverage and an ongoing rise in the number of uninsured. That rise could be much steeper if national policymakers undercut Medicaid’s capacity to expand.

Medicaid’s responsiveness to changing conditions may also have important implications for the economy as a whole, not just for individuals in need. When recession hits, more households have incomes low enough to qualify for Medicaid. Because Medicaid guarantees coverage to eligible individuals, enrollment automatically rises, which increases state and federal spending. Such spending stimulates the economy, limiting further job loss and contributing to economic recovery.

http://www.jointcenter.org/publications1/publication-PDFs/MediCaidFullReport.pdf

And…

Sailing into the Perfect Storm
Uwe Reinhardt, Ph.D., Princeton University
National Conference of State Legislatures Annual Meeting
August 19, 2005

Tax Cuts versus Added Health Spending

The tax cuts of 2001 and 2003 were passed on the (Keynesian) argument that it would put added money into the pockets of taxpayers who would then spend more and, thus, revive the economy.

An economist would find it hard to argue with this theory. It is standard fare in macro-economic policy and it works.

That same theory, however, also predicts that added government spending – be it on health care, education, roads, or mass transit – revives the economy as well.

For example, without the rapid growth of health spending during the 1980s and the jobs it added, the Reagan recovery of that decade would not have been nearly as robust.

Every added dollar of health spending diffuses quickly throughout the entire US and, most importantly, stays at home. Hardly any of it leaks abroad.

By contrast, good parts of a major tax cut may leak abroad in the form of offshore investments or spending on consumer goods made abroad.

The construction of new hospital facilities or of new golf resorts both are scored as “investments” in the national GDP accounts.

We always pretend that building golf courses boosts the economy, while building hospitals is a drag on the economy.

Does that make sense to you?

http://www.ncsl.org/print/press/UReinhardtslides_AMSeattle05.pdf

And…

The White House
August 8, 2005

To ensure the economy remains strong, President Bush has called on Congress to act on other aspects of his agenda. His plans include making his tax cuts permanent, restraining spending by the Federal government…

http://www.whitehouse.gov/infocus/economy/index.html

Comment: How many times have you heard it? The only way that we can keep the economy going is to cut taxes and cut federal spending. The establishment of a commission to find $10 billion in cuts for the Medicaid program is an extension of the administration’s principle that any cut in federal spending is good for the economy.

This year, health care represents 15.6% of our Gross Domestic Product (GDP). That’s a huge hunk of our economy.

Policies that increase the flow of funds to the health care delivery system benefit the economy, whether those are private funds funneled through private insurers or public funds funneled through public insurance programs. The primary difference is that more of the funds passing through the hands of the private insurers are diverted to administrative services. Although the funds that insurers consume also enter the economy, most of us would rather see those funds spent on health care instead of superfluous paperwork.

The lesson: Do not ever let the opponents of reform get away with stating that the taxes that would be required to pay for a national health insurance program would destroy the economy. The exact opposite is true. It’s difficult to think of a better way to nurture a healthy economy than to nuture our health care system.

‘Skeletal’ benefits in doubt
Critics say cut-rate policies offer little coverage in need
By Victoria Colliver
San Francisco Chronicle
September 21, 2005

As health care costs soar, insurers are offering a growing array of low-cost policies with high deductibles and limited benefits.

Now, some public officials are questioning the value of those plans, and specifically whether they give consumers access to health care at a price they can afford.

In a hearing Tuesday in San Francisco, state Insurance Commissioner John Garamendi explored the issue, gathering testimony from insurers, physician groups and hospital groups in an effort to determine whether tougher standards should be set for policies with so-called skeletal benefits.

Such plans include those with strict caps on costs for hospitalization and medical events, as well as those that offer no coverage for maternity and other conditions. Some high-deductible policies generally come with tax-deferred savings accounts that can belong either to the employer or to the employee.

“As a regulator, I am troubled to see the floor of standard benefits eroding,” said Garamendi.

Inexpensive bare-bones plans might be attractive to consumers, but “it’s all well and good until you happen to need that coverage,” Garamendi said. Such policies could lead to bankruptcies and draw younger and healthier people out of insurance risk pools, causing more comprehensive policies to become more expensive, he said.

Representatives from the insurance industry said health plans are simply responding to the marketplace by creating more-affordable policies that give consumers more control in making health care decisions.

“The concern we have is people seem to be priced out of health insurance,” said Anne Eowan, of the Association of California Life and Health Insurance Companies.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/09/21/BUGVHEQULR1.DTL&hw=garamendi&sn=001&sc=1000

Comment: Tragically, the insurers, in preventing premium increases that would price their insurance products out of the market, are pricing patients out of health care.

Why do we leave them in charge? What saving grace is there that should cause us to continue to support market competition of private insurance plans over a universal program of public social insurance?

There is a saving grace for the latter: our health.

Note: The following Quote of the Day is highly controversial. If you are not in the mood to contemplate difficult societal issues, you may want to delete this message at this point.

Cross-National Correlations of Quantifiable Societal Health with Popular Religiosity and Secularism in the Prosperous Democracies A First Look
Gregory S. Paul
Journal of Religion & Society
Volume 7 (2005)

Abstract:

Large-scale surveys show dramatic declines in religiosity in favor of secularization in the developed democracies. Popular acceptance of evolutionary science correlates negatively with levels of religiosity, and the United States is the only prosperous nation where the majority absolutely believes in a creator and evolutionary science is unpopular.

Abundant data is available on rates of societal dysfunction and health in the first world. Cross-national comparisons of highly differing rates of religiosity and societal conditions form a mass epidemiological experiment that can be used to test whether high rates of belief in and worship of a creator are necessary for high levels of social health. Data correlations show that in almost all regards the highly secular democracies consistently enjoy low rates of societal dysfunction, while pro-religious and antievolution America performs poorly.

From the Introduction:

This study is a first, brief look at an important subject that has been almost entirely neglected by social scientists. The primary intent is to present basic correlations of the elemental data. Some conclusions that can be gleaned from the plots are outlined. This is not an attempt to present a definitive study that establishes cause versus effect between religiosity, secularism and societal health.

Conclusion:

The United States’ deep social problems are all the more disturbing because the nation enjoys exceptional per capita wealth among the major western nations (Barro and McCleary; Kasman; PEW; UN Development Programme, 2000, 2004). Spending on health care is much higher as a portion of the GDP and per capita, by a factor of a third to two or more, than in any other developing democracy (UN Development Programme, 2000, 2004). The U.S. is therefore the least efficient western nation in terms of converting wealth into cultural and physical health. Understanding the reasons for this failure is urgent, and doing so requires considering the degree to which cause versus effect is responsible for the observed correlations between social conditions and religiosity versus secularism. It is therefore hoped that this initial look at a subject of pressing importance will inspire more extensive research on the subject. Pressing questions include the reasons, whether theistic or non-theistic, that the exceptionally wealthy U.S. is so inefficient that it is experiencing a much higher degree of societal distress than are less religious, less wealthy prosperous democracies.

Conversely, how do the latter achieve superior societal health while having little in the way of the religious values or institutions? There is evidence that within the U.S. strong disparities in religious belief versus acceptance of evolution are correlated with similarly varying rates of societal dysfunction, the strongly theistic, anti-evolution south and mid-west having markedly worse homicide, mortality, STD, youth pregnancy, marital and related problems than the northeast where societal conditions, secularization, and acceptance of evolution approach European norms (Aral and Holmes; Beeghley, Doyle, 2002). It is the responsibility of the research community to address controversial issues and provide the information that the citizens of democracies need to chart their future courses.

http://moses.creighton.edu/JRS/pdf/2005-11.pdf

The Journal of Religion & Society is a cross-disciplinary, electronic journal published by the Rabbi Myer and Dorothy Kripke Center for the Study of Religion and Society at Creighton University.
http://moses.creighton.edu/JRS/index.html

Comment: Many will dispute that there is a cause and effect relationship in this correlation, and some will dispute the conclusions regarding the comparisons of societal health between prosperous developed democracies. It is not the intent of this message to address these debates.

There is an important health policy lesson here. Policies that accept the status quo in health care, and depend on societal faith-based, charitable impulses to address the deficiencies, have not and never will ensure adequate access and coverage for the tens of millions of Americans currently left out. All other prosperous democracies have depended on secular government interventions and resources to ensure health security for all. The United States has no other choice than to do the same if we ever expect to realize our Samaritan values extolled by our religious leaders.

The Post-Katrina Era
By George Lakoff
The Huffington Post
September 8, 2005

It is impossible for me, as it is for most Americans, to watch the horror and suffering from Hurricane Katrina and not feel physically sore, pained, bereft, empty, heart-broken. And angry.

Katrina will not go away soon, and she has the power to change America.

The cause was political through and through – a matter of values and principles. The progressive-liberal values are America’s values, and we need to go back to them.

The heart of progressive-liberal values is simple: empathy (caring about and for people) and responsibility (acting responsibly on that empathy). These values translate into a simple principle: Use the common wealth for the common good to better all our lives. In short, promoting the common good is the central role of government.

The right-wing conservatives now in power have the opposite values and principles. Their main value is Rely on individual discipline and initiative. The central principle: Government has no useful role. The only common good is the sum of individual goods.

It’s the difference between We’re-all-in-this-together and You’re-on-your-own-buddy.

It’s the difference between Every citizen is entitled to protection and You’re only entitled to what you can afford.

It’s the difference between connection and separation.

It is this difference in moral and political philosophy that lies behind the tragedy of Katrina.

It is a truth that needs to be told starting now – over and over. There can be no delay. The Bush administration is busy framing it in it’s own way: bad things just happen, it’s no one’s fault; the federal government did the best it could – the problem was at the state and local level; we’ll rebuild and everything will be okay; the people being shipped out will have better lives elsewhere, and jobs in WalMart! Unless the real truth is told starting now, the American people will accept it for lack of an alternative.

The Democratic response so far is playing right into Bush’s framing. By delaying a response for fear it will be called “partisan,” the Democratic leadership is allowing Bush to frame the tragedy. And once it is framed, it is hard to reframe! It is time to start now.

http://www.huffingtonpost.com/george-lakoff/the-postkatrina-era_b_7034.html

And…

Democrats In Disarray
By E. J. Dionne Jr.
The Washington Post
September 27, 2005

Democrats and liberals are ecstatic that President Bush has finally faced his moment of accountability. The travails of Hurricane Katrina followed a bad summer for the president and have called into question his leadership style, competence and intense partisanship.

But Democrats are less ecstatic about . . . Democrats. Over the past several weeks, it was impossible not to run into Bush critics who would shake their heads and complain: “Yes, but where are the Democrats? Who are our leaders?
What do they have to say?”

But the party’s problems are structural and can be explained by three numbers: 21, 34 and 45. According to the network exit polls, 21 percent of the voters who cast ballots in 2004 called themselves liberal, 34 percent said they were conservative and 45 percent called themselves moderate.

Those numbers mean that liberal-leaning Democrats are far more dependent than conservatively inclined Republicans on alliances with the political center. Democrats second-guess themselves because they have to.

Consider that in 2004 Democrat John Kerry won 85 percent of the liberal vote and defeated Bush by a healthy 54 percent to 45 percent among moderates. But Bush prevailed because he won 84 percent of a conservative vote that constitutes more than a third of the electorate.

The core difficulty for Democrats is that they must solve two problems simultaneously — and solving one problem can get in the way of solving the other. Over time Democrats need to reduce the conservative advantage over liberals in the electorate, which means the party needs to take clear stands that could detach voters from their allegiance to conservatism. For some in the party this means becoming more moderate on cultural issues such as abortion. For others it means full-throated populism to attract lower-income social conservatives. Some favor a combination of the two, while still others worry that too much populism would drive away moderate voters in the upper middle class. The debate often leads to intellectual gridlock.

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/26/AR2005092601462.html

Comment: Politics! Well, as far as health care reform is concerned, politics have certainly resulted in intellectual gridlock (plural is deliberate).

George Lakoff is both right and wrong. Allowing the conservatives to frame the debate on health care reform has prevented the liberals from communicating the efficiency and effectiveness of national health insurance.

On the other hand, framing the debate as “promoting the common good” versus “relying on individual discipline and initiative,” will only further solidify the liberal/conservative political polarization over health care reform. This approach to the debate can only enhance the position of the conservatives because it strengthens gridlock, ensuring a perpetual impasse on reform.

The debate does need to be reframed, but in a highly credible, non-partisan manner. We need to address the leading health care concerns of most Americans, including affordability, access, higher quality, choice, reliable coverage, and simple fairness in funding health care. Although there are many models of reform, only national health insurance can guarantee all of these. (The very few other models that might come close lose out on affordability.) These are not partisan issues. All Americans agree on them.

This reframing of the debate is not a concession to moderates. Liberals will still be promoting the common good, but they can do that better by publicly supporting these issues, rather than by shoving “Health Care is a Right!” placards into the faces of the conservatives.

There is evidence that this approach is already having a positive effect. A survey by The Pew Research Center demonstrated that 65% of Americans “favor a government guarantee of health insurance for all Americans, even if it means raising taxes.” This includes 59% of Republicans who are social conservatives and 63% of Republicans who are pro-government conservatives. Only Republican enterprisers remain opposed.

We need to reframe, but not as a Red versus Blue debate. Let’s have an all Purple debate, and we can do that without any compromise in the principles of the Blue, albeit without the support of a minority sector of the Red. That sector is hopeless anyway.

The Pew Research Center report, “Beyond Red vs. Blue”:
http://people-press.org/reports/display.php3?ReportID=242

Entrances and Exits: Health Insurance Churning, 1998-2000
By Kathryn Klein, Sherry Glied, and Danielle Ferry
The Commonwealth Fund
September 2005

Abstract:

Analysis of 1998-2000 health insurance data from the Medical Expenditure Panel Survey shows large numbers of people with unstable health insurance coverage.Young adults, Hispanics, people with low levels of education, those who transition into and out of poverty, and those with private non-group insurance are most likely to have unstable coverage. In addition, demographic factors and type of insurance interact to determine stability of coverage.Young adults and Hispanics with Medicaid or private insurance, for example, were relatively likely to lose their coverage. And less than half of people who transitioned into and out of low income and were initially uninsured were able to obtain coverage. Policies must target these high-risk groups in order to provide them with stable health insurance coverage.

http://www.cmwf.org/usr_doc/klein_855_entrancesexits_ib.pdf

Comment: Numerous studies have shown that individuals with unstable, intermittent insurance coverage are exposed to the same risks as the uninsured: financial hardship, impaired health outcomes, and even death. Policies should target not only the uninsured, but the victims of insurance churning as well. Targeting policies to the latter can be difficult since these are moving targets.

Obviously insurance churning would disappear, as would the problems of the uninsured and the under-insured, if we adopted a universal, single payer system. It is astounding that we continue to reject a simple, affordable, highly effective solution, while we continue to tinker with more carefully targeted but fragmented programs that are more expensive and relatively ineffective. Whatever happened to common sense?

“Choice” in Health Care: What Do People Really Want?
By Jeanne M. Lambrew, Ph.D.
The Commonwealth Fund
September 2005

Abstract:

Proposals to expand the individual health insurance market and promote health savings accounts are intended to provide consumers with more “choice.” The types of choices people prefer, however, are not well understood. This analysis of survey data finds that having a choice of health care providers matters more to people than having a choice of health plans. Dissatisfaction among adults with no choice of providers was more than twice as high as among those with no choice of plan. Moreover, a large majority of Americans who have had experience with employer-based health insurance believe that employers do a good job of selecting quality plans.

Two of three preferred an employer-selected set of plans over an employer-funded account that they would use to find coverage on their own.

Thus, policymakers should be cautious about embracing the individual market and health savings accounts as a way to improve satisfaction in the system.

http://www.cmwf.org/usr_doc/lambrew_853_choice_ib.pdf

Comment: The debate over “choice” in health care is more than a rhetorical game; it drives policy.

This survey adds to the research that confirms that patients clearly do want to have choice of their providers of care, including physicians and hospitals, and that provider choice is much more important than having choice of insurers. Yet advocates of market approaches to health care funding tout choice of health plans as if that were the only choice that consumers want, and most plans do restrict choice of providers to varying degrees.

An important finding of this study is that individuals do have confidence in plans that are selected by employers. As long the plan covers the patients’ own providers, they could care less which insurer is providing the administrative services. In contrast, if the insurer takes away patients’ choices of providers, then they are displeased with that plan. (Kaiser Permanente is not an exception because patients have selected that system as their provider.)

Recently, we’ve seen an increase in political support for providing incentives to choose products in the individual insurance market. Insurers recognize that beneficiaries do want to have greater choice of their providers. Thus we are seeing larger lists of approved providers, along with coverage for out-of-network providers, albeit with financial penalties. But this relaxation of the exclusions from provider lists may represent a Hobson’s choice.

The tradeoff for having greater choice of providers is to relinquish the financial security that insurers traditionally provided. Having a choice of a physician who you cannot afford provides less choice than the first horse at the stable door. After all, Hobson did provide a horse, but the insurers are no longer providing financial security in the event of loss.

“Choice” in Health Care: What Do People Really Want?
By Jeanne M. Lambrew, Ph.D.
The Commonwealth Fund
September 2005

Abstract:

Proposals to expand the individual health insurance market and promote health savings accounts are intended to provide consumers with more “choice.” The types of choices people prefer, however, are not well understood. This analysis of survey data finds that having a choice of health care providers matters more to people than having a choice of health plans. Dissatisfaction among adults with no choice of providers was more than twice as high as among those with no choice of plan. Moreover, a large majority of Americans who have had experience with employer-based health insurance believe that employers do a good job of selecting quality plans.

Two of three preferred an employer-selected set of plans over an employer-funded account that they would use to find coverage on their own.

Thus, policymakers should be cautious about embracing the individual market and health savings accounts as a way to improve satisfaction in the system.

http://www.cmwf.org/usr_doc/lambrew_853_choice_ib.pdf

Comment: The debate over “choice” in health care is more than a rhetorical game; it drives policy.

This survey adds to the research that confirms that patients clearly do want to have choice of their providers of care, including physicians and hospitals, and that provider choice is much more important than having choice of insurers. Yet advocates of market approaches to health care funding tout choice of health plans as if that were the only choice that consumers want, and most plans do restrict choice of providers to varying degrees.

An important finding of this study is that individuals do have confidence in plans that are selected by employers. As long the plan covers the patients’ own providers, they could care less which insurer is providing the administrative services. In contrast, if the insurer takes away patients’ choices of providers, then they are displeased with that plan. (Kaiser Permanente is not an exception because patients have selected that system as their provider.)

Recently, we’ve seen an increase in political support for providing incentives to choose products in the individual insurance market. Insurers recognize that beneficiaries do want to have greater choice of their providers. Thus we are seeing larger lists of approved providers, along with coverage for out-of-network providers, albeit with financial penalties. But this relaxation of the exclusions from provider lists may represent a Hobson’s choice.

The tradeoff for having greater choice of providers is to relinquish the financial security that insurers traditionally provided. Having a choice of a physician who you cannot afford provides less choice than the first horse at the stable door. After all, Hobson did provide a horse, but the insurers are no longer providing financial security in the event of loss.

Aetna Launches New Health Insurance Website with Online Enrollment Capability for Individuals and Their Families
Aetna Press Release
September 20, 2005

“Aetna is making it as simple as possible for individuals to choose the appropriate, affordable plans that match their health care coverage needs,” said Laurie Brubaker, Aetna’s national general manager for Individual Markets. “The website guides individuals to consider their current life stages – for example, graduating from college, getting married, raising a family, becoming a sole proprietor, being between jobs or retiring early. We know that people’s priorities change and life circumstances determine the type of health care coverage individuals need.”

“We believe we can make an impact on reducing this nation’s population of uninsured – and under-insured – people,” Brubaker added. “We have researched consumers’ needs and created a range of health plans that provide choice, simplicity and affordability. Our cost-effective plans are designed to fit a variety of personal situations.”

In addition, Aetna offers individuals and their families high-deductible health plans that are compatible with the Aetna HealthFund(R) HSA (health savings account) in (eleven states and D.C.). These plans offer members similar benefits to the Aetna Advantage PPO plans… paired with an HSA.

http://www.aetna.com/news/2005/pr_20050920.htm

And…

Health Products for Individuals
Aetna

Life Stages in California (as an example)

New graduate
Getting married
Raising a family
Self employed
Between jobs
Empty nest
Retiring early

Frequently Asked Questions

The Aetna Advantage plans are voluntary plans that are medically underwritten; they are not conversion plans.

http://www.aetna.com/members/individuals/

Brochure for California Aetna Advantage Plan options:
http://www.aetna.com/members/individuals/health/data/
memberbrochure_California.pdf

Comment: The trends represented by the Aetna Advantage plans portend disaster for the future of health care coverage. This discussion barely touches on some of the alarming aspects of their program.

These plans are being marketed as a mechanism of selecting out only the coverage that you believe you will need, thereby avoiding contributing to risk pools that include coverage that you believe you won’t need.

Individuals will be enticed by the lower premiums of the limited coverage they select. Since no healthy person can predict future major health care needs, those individuals who select the limited plans will find themselves financially vulnerable with a significant change in their health status.

This unpredictability is precisely why everyone needs to have comprehensive coverage through a common risk pool.

Since these plans are “voluntary plans that are medically underwritten,” they will be sold exclusively to healthy individuals. People with preexisting disorders will have to find their coverage elsewhere. In the individual market, those plans would have to charge very high premiums because they concentrate risk. In actuality, those plans have been priced out of the market, leaving these vulnerable individuals without coverage.

The state-sponsored high-risk pools have not been able to make a dent in this problem. Only nefarious insurers/policymakers would target those with the greatest needs for exclusion from coverage.

These plans for various life stages “are not conversion plans.” Simply stated, as you move from a low-risk life stage, to one with greater risks, you must again pass underwriting standards to be covered by a plan that better meets your needs. What a clever idea. Aetna has figured out a way to drop coverage of many of those individuals who do develop chronic problems.

A problem for traditional plans is that, through the years, many of their clients develop chronic problems, and that results in higher, less-competitive premiums. This life stage concept circumvents that problem. Wall Street should really like this.

One of the most serious defects is that these are being marketed as plans that provide catastrophic coverage. If you look at the brochure describing plan options, you will see that they all offer an “out-of-pocket maximum,” ranging from $5000 to $25000. So if you chose the most comprehensive coverage, your maximum out-of-pocket expense, as an individual, would be $5000 plus the premiums paid for the year, or so they would have you believe. But what is the “out-of-pocket maximum”? It is merely the deductible plus the coinsurance paid to in-network providers. It does not include deductible and coinsurance penalties for using out-of-network providers. It does not include the balance of fees and charges required by non-contracted providers, which can be in the thousands or tens of thousands of dollars. It does not include charges for services not covered by your individual plan, often the very coverage you declined because you wouldn’t need it. You would think that there would be regulations prohibiting insurers from using the term, “out-of-pocket maximum,” unless a full, clearly stated disclosure of the true risks were simultaneously provided.

Aetna also reveals the fallacy of the HSA plans. The high-deductible health plan that covers everything after the deductible is met is a fiction. The Aetna HealthFund(R) HSA plans “offer members similar benefits to the Aetna Advantage PPO plans.” Clearly, the HSA plans work only if you don’t get sick.

Under-insurance has become epidemic in America. Insured individuals are financially vulnerable in the face of significant medical need. The Aetna Advantage program represents a perverse expansion of this epidemic of under-insurance.

Aetna’s press release on the Aetna Advantage program, states that “we can make an impact on reducing this nation’s population of… under-insured people.” They could, but apparently they have no intention of doing so.

Aetna Launches New Health Insurance Website with Online Enrollment Capability for Individuals and Their Families
Aetna Press Release
September 20, 2005

“Aetna is making it as simple as possible for individuals to choose the appropriate, affordable plans that match their health care coverage needs,” said Laurie Brubaker, Aetna’s national general manager for Individual Markets. “The website guides individuals to consider their current life stages – for example, graduating from college, getting married, raising a family, becoming a sole proprietor, being between jobs or retiring early. We know that people’s priorities change and life circumstances determine the type of health care coverage individuals need.”

“We believe we can make an impact on reducing this nation’s population of uninsured – and under-insured – people,” Brubaker added. “We have researched consumers’ needs and created a range of health plans that provide choice, simplicity and affordability. Our cost-effective plans are designed to fit a variety of personal situations.”

In addition, Aetna offers individuals and their families high-deductible health plans that are compatible with the Aetna HealthFund(R) HSA (health savings account) in (eleven states and D.C.). These plans offer members similar benefits to the Aetna Advantage PPO plans… paired with an HSA.

http://www.aetna.com/news/2005/pr_20050920.htm

And…

Health Products for Individuals
Aetna

Life Stages in California (as an example)

New graduate
Getting married
Raising a family
Self employed
Between jobs
Empty nest
Retiring early

Frequently Asked Questions

The Aetna Advantage plans are voluntary plans that are medically underwritten; they are not conversion plans.

http://www.aetna.com/members/individuals/

Brochure for California Aetna Advantage Plan options:
http://www.aetna.com/members/individuals/health/data/
memberbrochure_California.pdf

Comment: The trends represented by the Aetna Advantage plans portend disaster for the future of health care coverage. This discussion barely touches on some of the alarming aspects of their program.

These plans are being marketed as a mechanism of selecting out only the coverage that you believe you will need, thereby avoiding contributing to risk pools that include coverage that you believe you won’t need.

Individuals will be enticed by the lower premiums of the limited coverage they select. Since no healthy person can predict future major health care needs, those individuals who select the limited plans will find themselves financially vulnerable with a significant change in their health status.

This unpredictability is precisely why everyone needs to have comprehensive coverage through a common risk pool.

Since these plans are “voluntary plans that are medically underwritten,” they will be sold exclusively to healthy individuals. People with preexisting disorders will have to find their coverage elsewhere. In the individual market, those plans would have to charge very high premiums because they concentrate risk. In actuality, those plans have been priced out of the market, leaving these vulnerable individuals without coverage.

The state-sponsored high-risk pools have not been able to make a dent in this problem. Only nefarious insurers/policymakers would target those with the greatest needs for exclusion from coverage.

These plans for various life stages “are not conversion plans.” Simply stated, as you move from a low-risk life stage, to one with greater risks, you must again pass underwriting standards to be covered by a plan that better meets your needs. What a clever idea. Aetna has figured out a way to drop coverage of many of those individuals who do develop chronic problems.

A problem for traditional plans is that, through the years, many of their clients develop chronic problems, and that results in higher, less-competitive premiums. This life stage concept circumvents that problem. Wall Street should really like this.

One of the most serious defects is that these are being marketed as plans that provide catastrophic coverage. If you look at the brochure describing plan options, you will see that they all offer an “out-of-pocket maximum,” ranging from $5000 to $25000. So if you chose the most comprehensive coverage, your maximum out-of-pocket expense, as an individual, would be $5000 plus the premiums paid for the year, or so they would have you believe. But what is the “out-of-pocket maximum”? It is merely the deductible plus the coinsurance paid to in-network providers. It does not include deductible and coinsurance penalties for using out-of-network providers. It does not include the balance of fees and charges required by non-contracted providers, which can be in the thousands or tens of thousands of dollars. It does not include charges for services not covered by your individual plan, often the very coverage you declined because you wouldn’t need it. You would think that there would be regulations prohibiting insurers from using the term, “out-of-pocket maximum,” unless a full, clearly stated disclosure of the true risks were simultaneously provided.

Aetna also reveals the fallacy of the HSA plans. The high-deductible health plan that covers everything after the deductible is met is a fiction. The Aetna HealthFund(R) HSA plans “offer members similar benefits to the Aetna Advantage PPO plans.” Clearly, the HSA plans work only if you don’t get sick.

Under-insurance has become epidemic in America. Insured individuals are financially vulnerable in the face of significant medical need. The Aetna Advantage program represents a perverse expansion of this epidemic of under-insurance.

Aetna’s press release on the Aetna Advantage program, states that “we can make an impact on reducing this nation’s population of… under-insured people.” They could, but apparently they have no intention of doing so.