Last Wednesday, The Washington Post told us the obvious: that “the fight over health-care legislation is saturating the summer airwaves, with groups on all sides of the debate pouring tens of millions of dollars into advertising campaigns designed to push the cause of reform forward, slow it down or stop it in its tracks.” It’s easy to be tempted to write the “fight on the airwaves” story and call it a day. We have a better idea: explain to all those perplexed people what the consumer protections President Obama promised will mean for them and for reform.
After all, these protections get to the heart of what the president has told us this effort was all about. He said it was about health insurance reform a few weeks ago in his TV address, and repeated that term again five times in his radio address this Saturday. Is he no longer calling for health care reform? And what the heck does ‘insurance reform’ mean for most average folks?
To help journalists and the public understand all this, I contacted Mila Kofman, the insurance superintendent for the state of Maine, who knows insurance regulation as well as anyone. A few takeaways: while some of Obama’s eight protections may be a real benefit to policyholders, others already exist, and reporters need to keep a careful eye on what happens to all of them as Congress and the special interests start fiddling with legislative language. Herewith is my consumer protection primer:
No discrimination for preexisting conditions. That’s a good thing, and insurers have agreed to eliminate health status as a factor for granting coverage in the individual market if every American is required to carry insurance one way or another. Right now, a few states restrict preexisting conditions clauses; the Health Insurance Portability and Accountability Act (HIPAA), passed in 1996, gives people the right to buy a policy in the individual market without regard to health problems if they do so within sixty-three days of losing coverage and if they have used up all their COBRA benefits. HIPAA, though, didn’t say anything about premiums, and so insurers in most states charge higher rates to discourage people with preexisting medical needs from signing up.
What to watch for: Lobbyists inserting language that limits insurers’ risks, like the restrictions in the HIPAA law that still make it difficult for sick people to obtain coverage. President Obama has been silent on the question of age rating, which serves as a proxy for using health as a factor in charging higher rates. Older people are likely to present more health risks and cost the insurers money. “As long as they can rate people up for age, that’s a proxy for health rating,” Kofman says.
No exorbitant out-of-pocket expenses, deductibles, or co-pays. Sounds reasonable. Insurance companies sell policies with protections for catastrophic expenses, called maximum out-of-pocket limits. However, some policies in the individual market don’t offer this protection, so requiring all policies to provide this is a step forward.
What to watch for: Lobbyists trying to water down the cap on individual expenses. The key here is what kind of services count toward the cap—deductibles, coinsurance, copays, drug expenses, medical care, and services that are not covered by insurance? In some current policies, visits to out-of-network specialists don’t count. Maximum out-of-pocket protection can still leave people at risk for thousands of dollars of expenses each year.
No cost-sharing for preventive care. Also good protection. Some policies simply cover preventive care without making policyholders pay coinsurance or copayments. Other policies, especially in the individual market, claim to cover preventive care but only after the annual deductible has been met. In other words, it’s an illusory benefit—especially when the deductible is more than a few hundred dollars, as many of them are these days. Obviously, it’s better to have a policy cover the care outright with minimum out-of-pocket expense.
What to watch for: Lobbyists trying to make some preventive care subject to deductibles, and imposing some cost-sharing requirements, thus weakening the protection. Also look at what is considered preventive care. Legislative wheeling and dealing may try to limit coverage to services that don’t cost very much.
No dropping coverage for seriously ill people. HIPAA does not allow insurers to drop people who have filed claims for serious illness. People with individual coverage and those in groups can’t be dropped if they have filed lots of claims. But the companies have found a way around this prohibition. If too many people in a group get sick, especially in a small group of people who have purchased the same individual policy, the company just closes off its “block of business” and sets off what’s known in the insurance biz as a death spiral. The company starts selling a new, perhaps similar product to healthy people, while sick people with the old coverage face higher and higher premiums, making the policy unaffordable. Eventually they drop the policy—which, of course, makes companies happy.
What to watch for: Lobbyists trying to sneak in provisions that would let insurers raise rates for sick people. Insurers have said publicly they would no longer charge sick people more money. Will that promise apply in these death spiral situations with policyholders already on the books, or will it apply only to people applying for new coverage? Look for companies to support language allowing flexible-benefit policies that effectively restrict what’s covered and discourage people with health problems from applying, because the policies won’t cover their conditions.
No gender discrimination. Charging women of child-bearing age more for coverage because women get pregnant “is horrific,” Kofman says. “It goes on all the time in most states because state law does not prohibit it.” Historically, companies have justified this policy because women file more claims—especially claims relating to pregnancy and childbirth, which can be expensive for insurers. Carriers have now said they will stop this practice.
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Obama's plan should be more focused on the same type of plans held by members of the congress concerning health care. They take very good care of themselves. I am of the opinion that the American people are every bit as important as members of congress. Equality takes on a new meaning when it comes down to who is taking care of whom.
Posted by Duane Allen on Wed 12 Aug 2009 at 11:22 AM
Obama's plan should be more focused on the same type of plans held by members of the congress concerning health care. They take very good care of themselves. I am of the opinion that the American people are every bit as important as members of congress. Equality takes on a new meaning when it comes down to who is taking care of whom.
Posted by Duane Allen on Wed 12 Aug 2009 at 11:23 AM
Duane, you realize that the federal government contracts with hundreds of insurers, that they have a range of hundreds of plans for people at various income levels. Many STILL can't afford one.
I think that they pay 75% of the cost for full time employees--but that many Federal employees, even with those substantial subsidies, still can't afford one.
Thats the cost of health care. That's the dark side they want to hide as long as they can.
Look at it this way. If a Congressperson is paid say, $100k a year, and a mailman makes $40k and they are both offered a healthcare plan that costs 20k for a family, but the Federal government pays $15k that leaves $5000 that an employee must pay. That $5000 ends up being a huge bite for the postman, but not such a big bite for the congressman.
Now, suppose YOU, the outsider, are offered the opportunity to buy into "the same plan", at the same price, $20,000.
Its a bit like COBRA. The same plan, at the same price. But SO few of us turn out to be able to afford it!
Welcome to America.
Ouch. You forgot these politicians start out as lawyers. And you listened to that lawyer speak.
Dont forget, Catch 22, you're not a federal employee!
No, just buying into their system at their cost. If you have a big income, and perhaps some health problem, you would probably jump at the chance, because you need to be able to avoid individual premiums which are much higher than that, (and the plans have such high deductibles they don't pay much, so people with health problems soon find it doesn't work for them)
But, don't expect to walk away smiling. And many people wont be able to afford the cost in any possible way. (That's what they are waiting years for, BTW. And prices are going up, fast.)
See my point? Naive voters voted assuming that they would through some miracle, get a 75% subsidy which they almost certainly couldn't in actuality, get. That $15000 subsidy is the reason the postman can afford a health plan and you might not be able to, even if you are "offered" a group plan.
(If you are "offered" one at work, but can't afford it, you wont even get that. No public options for you. Thats a deal thats going to make a lot of people very angry. No wonder they want to put it off for years, perhaps decades.)
I hope that this helps make the problem a little clearer. Even if you are allowed into Tiffany's that doen't mean you can buy diamonds. Or even fake ones.
Consumer driven plans are a dead end in that its NOT a choice when you cant find a single affordable option that works to get you affordable, quality health care.
They are designed to conceal that unpleasantness. Nobody likes telling people stuff like that.
Its a trap.
Posted by Charles on Sat 31 Oct 2009 at 05:13 PM