Make health insurers play fair
Any plan to reform healthcare must tackle the biggest obstacle to insuring everyone — private insurers.
By Jamie Court and Judy Dugan
Los Angeles Times
January 5, 2007
When Gov. Arnold Schwarzenegger, on crutches, unveils his expected grand redesign of the state’s health insurance system Monday, he must tackle the biggest obstacle to insuring the uninsured: insurance companies.
For health coverage truly to be affordable and accessible, the governor and Legislature must force insurers to accept the following rules of fairness:
* A “take-all-comers” rule. Insurers today can deny a health policy to individual buyers in California for almost any reason. In Massachusetts, which recently required all citizens to carry health insurance, insurers have to take all patients, regardless of preexisting conditions. California insurers should be required to do the same.
* Charges set by community, not condition. California health insurers want to insure the healthy, not the sick, so they charge individuals who even might become sick astronomical premiums. Those who do become ill can see their premiums skyrocket or their policies canceled. It’s the opposite of Massachusetts and other states where health insurers must base premiums on broad characteristics such as age and regional healthcare costs — not on a buyer’s specific medical condition. The purpose of insurance, after all, is to spread the risk.
* Regulation of health premiums like auto premiums. California auto insurers must show that their profits are reasonable and ask permission of state regulators before raising premiums. The system has saved motorists tens of billions of dollars on their auto insurance since it was adopted in 1988. It’s the least the state should demand of health insurers, who now face little to no scrutiny of their profits or bloated administrative costs. As a result, health insurers that sell to individuals spend as little as 50 cents of every premium dollar on actual medical care.
* A ban on health insurance policies that set no limits on what patients can pay. A policy that pays only $300 a day for a hospital stay that costs as much as $10,000 a day may cost a lot less than comprehensive policies, but it is hardly worth the paper it is printed on. Fringe insurers have been held accountable in California courts for such “junk insurance,” but traditional insurers are moving toward similar “mini-policies.” All policies should have an out-of-
pocket maximum. If you’re left with half a million dollars in medical bills, as one California patient was recently after her husband’s death from cancer, then you’re not really covered.
* A “California Health Plan” offering universal access to public officials’ health coverage. The state employees’ retirement and benefits fund, CalPERS, has used its size and clout to cut drug costs and provide care without paying for insurers’ profit and overhead. Hundreds of thousands of state employees, including legislators and gubernatorial aides, have access to this directly state-funded system. If all Californians had access to this well-run, low-overhead plan, private insurers would be forced to drop prices and reduce overhead and profits if they wanted to compete.
http://www.latimes.com/news/printedition/opinion/la-oe-court5jan05,1,4392420.story?coll=la-news-comment
Comment:
By Don McCanne, MD
How many times have you heard from supporters of universal health care that every American should have the same coverage as members of Congress? They have the best insurance available today: Federal Employees’ Health Benefit Program (FEHBP).
California has used these same concepts to create a high-quality, comprehensive program for its public employees: CalPERS. California, led by the efforts of Gov. Schwarzenegger, is now tackling the difficult problem of covering the 6 million uninsured. Jamie Court and Judy Dugan of the Foundation for Taxpayer and Consumer Rights make the case that all Californians should be granted access to the well-run, low-overhead CalPERS program. How well would that work?
My daughter, a civil and environmental engineer, receives CalPERS coverage through her employer. Of the three types of plans offered (HMO, PPO, and EPO) she elected a PPO. Her plan has a $500 deductible, and provides 100% coverage after she has met stop-loss expenses of $3000. At her income level, a maximum out-of-pocket expense of $3000 would not be an unbearable burden (though it likely would be for low- to moderate-income individuals).
Using CalPERS coverage, she recently had an outpatient orthopedic procedure. Her orthopedist is in the insurer’s network, and prior authorization was obtained. Shortly after, she received the explanation of benefits from the CalPERS insurer. The total charges were $26,000 and the charges that were her responsibility were $16,000.
How could the best insurance available that covers all expenses after $3000 assess the patient a $13,000 penalty? I’ll leave it to you to guess how that might have happened, but I’ll describe it in the most positive word that I can come up with as a “technicality.” The important issue is not that there was a technicality, but that we continue to support a system that is rife with unnecessary and unfair technicalities.
The $13,000 penalty is currently being negotiated, but not with the CalPERS PPO. The technicality totally protects the insurer. My daughter’s only recourse is to negotiate with her health care providers a reduction in disallowed charges. The CalPERS insurer, the best there is, stands firm in its position that either the patient or the providers must bear the losses resulting from a technicality specifically designed to protect the insurer.
The role of private insurers is not amoral; it is immoral! They should be ejected from the health care equation. Those complacent with their CalPERS and FEHBP coverage need to take a closer look.
Jamie Court is a hero of mine. He has continued to stand up to the nefarious private insurance industry. I do respectfully differ with him in his conclusion in today’s article. We shouldn’t make CalPERS available to all Californians. We need to throw them out, and then cover all Californians, and the entire nation, with a comprehensive, single payer, public insurance program.
Technicalities are a strategic tool of private market plans, but not of public insurance. We should disqualify the private insurers on this technicality alone.