A Flawed Step Forward on Health-Care Reform

"Just a point of clarification: the pre-existing condition restriction is not a practice of health insurance companies. It is a practice of the employer that pays for the health insurance."

I am tempted to make a snide comment here. But I won't. However, there are so many instances where individuals with certain chronic conditions have attempted to buy health insurance on an individual basis (not through an employer). These people have been completely denied; they are not offered any policy at all, even at higher prices. They are completely shut out.

Then there are the cases of "recission" where an individual policy-holder has made a claim for an illness. The insurance company digs up some excuse to retro-actively deny the claim and cancel the policy.

http://www.walletpop.com/blog/2009/09/02/think-...

http://www.denverpost.com/ci_13530098

http://www.goinsurancerates.com/health-insuranc...

As an HR consultant and benefit broker I'm not familiar with those insurance policies that cover pre-existing conditions for companies with under 100 lives as well as many larger groups. The carriers will set premiums based on the pre-existing conditions, but still exclude covering them typically for a minimum of 12 months.

I think you'll find that most of the cases like those you site happen with companies that are self-insured, not companies that buy insurance from an insurance company or HMO. And they are exeptions to the rule, not the rule. The mainstream media do a great job of taking exceptions to the rule and fooling people into thinking they are the rule.

As for individual policies, there is a lot more going on than you think. There is no free market in health insurance. State insurance commissions set premiums, not insurance companies. And in setting those rates, the state commissions set limits on premiums and limits on the spreads between the highest and lowest premiums. So if an insurance company denies coverage to an individual because of a pre-existing condition, then it did so because the state insurance commission won't allow the insurance company to charge the individual a premium that would pay for the medical services he needs with that pre-existing condition.

After all, if an individual had cancer as a pre-existing condition and the insurance company could charge $100,000/month for coverage, assuming the individual would buy it at that cost, any insurance company would be glad to issue a policy. Insurance companies often take a small loss on some people because premiums are set for the average person. So those with few health problems make up for those with a lot. But no insurance company is going to insure someone when they are certain the the medical bills will bankrupt the company.

As an example, the HMO where I work issued a policy to a company that did not exclude pre-existing conditions a few years ago. We didn't know that one of their employees had hemophelia. That one hemophelia cost us over $1 million per year for several years. When it came time to renew the insurance, we had to raise premiums to make up for our losses on that policy, but the company dropped us for another insurance company. We couldn't eat the losses because our prophets had fallen to 2%, so we had to raise premiums for other members.

This is somewhat of a disengenuous statement in that the disparity in premium charge or PMPM cost is so draconianly different for non-pre-existing plans that it is a non-starter in reality. Plans offering exemption from pre-existing conditions are in reality mythical.

That all depends on the laws and the insurance commission in your particular state. If the insurance company can't charge the company a premium that will pay for pre-existing condition because of the state law, then they will have to find some other way of getting relief. That could include a 12 month waiting period. Some states are much more restrictive than others on what insurance companies can do.

Oh dear, where to start?

First off, the deceptions resorted to in order to promote this bill have been breathtaking. For instance, the overall cost estimates for this turkey are based on ten years of revenues but only six of most benefits, so the budget impacts are all out of kilter.

Obama keeps saying that this bill will reduce premiums, but the mechanisms for containing premiums are all watered down.

The procedural tricks that the bill's backers appear to be resorting to are flagrant and violate the spirit if not the letter of the Constitution. It is entirely possible that the Supreme Court will hold the whole thing invalid.

The political payoffs in the Senate Bill reek almost as bad as the Slaughter Rule -- and there's a very real chance that they will be signed into law without any reconciliation to fix them.

I would say at this point that even if one supports socialized, single-payer health care the total lack of integrity in this process necessitates a no vote and a complete reset of the health care debate, beginning with the introduction of a far simpler bill in committee.

"As for individual policies, there is a lot more going on than you think. There is no free market in health insurance."

That is SO TRUE! Which is why the Repubs had united to offer an alternative instead of stonewalling. Because we surely need reform to actually have a free market. I realize that a few Republicans offered alternative plans. However, for the past few months, the Repub strategy has consisted of stonewalling, as if they want no change at all.

It's as if the Republicans don't care if people with pre-existing conditions can't get insurance and thus cannot get health care and then they die -- Palin's infamous "death panels" are alive and well within the insurance industry. I'm not sure that the health insurance "death panels" are what the Republicans mean to communicate, but that's how it is coming across.

Oh, and another point I missed: "So those with few health problems make up for those with a lot. But no insurance company is going to insure someone when they are certain the the medical bills will bankrupt the company."

So what does someone like this do? Just go off into the woods to die? Here we go with the Death Panels.

I'm wondering: if insurance companies could cross state lines and thus access large pools of insured, that they could insure sick people without going bankrupt. This cannot happen unless the anti-trust exemption that the insurance companies now enjoy is rescinded. Right now, the insurance companies operate as a huge, monopolistic, socialist cartel rather than a free-market, capitalist industry. This monopoly has to be broken up; and I don't think that a government "public option" will be the solution.

"the total lack of integrity in this process necessitates a no vote and a complete reset of the health care debate"

Assuming that our current political system actually worked, this might be a good option.

How did we get the current bill? By running it through our current political system.

If we started over what would we get? Right. Another messed-up bill. And again, and again...

I disagree with you that the result of passage would be worse than nothing -- but even if it were worse, it would still be better than replaying the start-over loop that has been playing for 50 years now.

"necessitates a no vote and a complete reset of the health care debate, beginning with the introduction of a far simpler bill in committee."

The time for those opposed to the current health reform bill to "reset" the debate was a long, long time ago. Those more inclined to free market alternatives should have stepped up with an alternative plan a year ago and should have pushed it hard.

Right now, at this late date, the rationale for "starting over" sounds like a delaying, stonewalling tactic to just keep things the way they are. I think that the stonewalling tactic -- that seems to advocate keeping things the same with no reform at all -- will hurt the Repubs far more than passing a flawed health care reform bill with hurt the Dems.

If anyone were to take a poll: who do you hate more, the government or the health insurance companies? I think that the insurance companies would receive far more votes. If Repubs are perceived as being on the side of the hated insurance companies, it will backfire on them. Mark my words. I think the Repubs blew it with their stonewalling "Party of No" tactics. They should have pushed a lot harder with an alternative reform plan.

Ultimately, insurance is a matter of spreading the overall costs to the purchasers of the policy. So what you describe is inevitable if it costs $1 million/yr to treat someone with hemophilia.

So, realistically, there are two problems. (1) What is the fair way to spread the costs around? Let's say someone has cancer, and costs $$$ to treat. Should this person pay more than a healthy person? How much more? (2) How do we reduce the insane overall costs? No amount of cost shifting/spreading will fix the problem, when 18% of our national income (and rising) is going toward health-care. Other industrialized countries have equal or better outcomes while spending 1/3rd to 1/2 what we spend per capita. Sadly, this bill does not seem to address the overall cost problem head-on.

wavetossed: "Which is why the Repubs had united..."

Please don't consider me a Republican. That insults me and Republicans. I'm a libertarian.

wavetossed: "So what does someone like this do?"

My point was that the states make it impossible to cover some people. What such person can do depends upon the state. In Oklahoma insurance companies pay into a state fund to provide care for people who can't get insurance because of pre-existing conditions. I don't know what other states do.

And don't think I'm defending the existing system. I'm not. I think it's ridiculous. Though a libertarian, I would much more prefer the socialist healthcare of Europe to the mess we have in the US. I merely wanted to clear of some things.

"What is the fair way to spread the costs around?"

In a truly free market, healthcare costs would be much lower and that would help a lot. The main problem with spreading the costs are that the costs are so ridiculously high in the US. With lower costs, it would be easier to save to pay for health problems. But even then some people won't save or won't be able to save for catastrophic illnesses and won't have insurance. In that case, charities would pick up the bill. Currently, most charity goes to education, but I think it would be possible to redirect much of that to healthcare.

With lower costs, people wouldn't buy insurance for run-of-the-mill problems but only for catastrophic illnesses. That in itself would keep premiums down. I have often thought that insurance companies should offer policies in which the patient goes to India for major surgery or cancer treatment where the treatment is excellent but 1/10 the cost in the US. Premiums for that kind of insurance would be very low.

And in a free market insurance companies would work more like life insurance in which members would buy while they're young when rates are low so that premiums wouldn't rise when they're old and need the health care. Those who waited until they were old would pay much higher premiums.

"Should this person pay more than a healthy person?"

If you're talking about insurance, it is only fair for the sicker person to pay more than a healthy person. However, if both people were healthy when they got policies, and the policies worked like life insurance, then there would be no penalty for the person who gets sick later.

"How do we reduce the insane overall costs"?

That's the major problem. I really liked the article from Atlantic that some linked to on another thread, "How American Health Care Killed My Father" from the Sept 2009 issue. It has just about all that can be said about reducing costs in healthcare.

However, I think everything above is a pipe dream. It ain't never gonna happen even though it should. What is a practical alternative? Adopt a rational, European system in which the state fixes the prices for all healthcare from drugs to doctor salaries to hospital charges.

Since January of last year opponents of this bill have never been in a position to "reset" this bill. It is up to advocates of health care to recognize that their handiwork is a total disaster and hit the reset button in order to salvage something of their own credibility.

The rationale for delaying this "reform" bill is the same rationale one would have for delaying a suicide -- to rethink and hopefully avoid a self-destructive act.

I don't hate health insurers or government -- but poll after poll has shown that the American public does not want health care passed along its current lines. You may hope that the defeat of this bill will backfire on the GOP. We'll see how that works for you in November.

I think you are effectively counselling despair by implying that our political leaders cannot learn from mistakes and produce a better bill.

The mistakes are fairly obvious -- they produced a radical, extreme bill that has had virtually no support from the other party, not even moderates like Olympia Snowe. They also insisted on setting up the bill in just such a way as to make the costs look much smaller than they will be in reality.

The path to a better bill is fairly clear: moderate your bill so you peel off a handful of Republican Senators -- you don't need a whole lot -- and avoid the need for procedural games like reconciliation or the Slaughter Rule, then abandon attempts to manipulate cost estimates.

It can be done, if you actually want a health care bill that works.

"[WT] 'Which is why the Repubs had united...'

"[fundamentalist]Please don't consider me a Republican. That insults me and Republicans. I'm a libertarian."

So am I. I didn't mean to imply that you are a Republican. I know that many here think that I'm a Dem. I'm a registered independent. There are many "stripes" of libertarians, I've found. For instance, some are pro-Iraq war and others (like myself and my favorite candidate, Ron Paul) are ardently antiwar. Check out antiwar.com for a libertarian take on foreign wars. I also agree with the Cato Institute on immigration; they take a classical libertarian view on it.

"Though a libertarian, I would much more prefer the socialist healthcare of Europe to the mess we have in the US. I merely wanted to clear of some things."

I don't think I want a single-payer system in the U.S. It wouldn't be like how it is run in Europe. Instead, it would be run similarly to the VA or Social Security with an entire industry of lawyers ready to appeal denials and people would still be out in the cold. What I want is a break-up of the monpolistic health insurance cartel so that we can have a true free market. I truly wish either the Repubs or someone else had pushed hard on a free market alternative to the House and/or Senate bill. But the Repubs decided to do the "Party of No" thing and all they are doing is helping out the health insurance monopoly cartel. So right now, as a practical matter, I'd rather have the Senate bill than have nothing. I think that the "Party of No" stance is going to eventually backfire on the Repubs. People hate the insurance companies worse than they hate the government.

Ruth Marcus gives us good reason to doubt the budgetary promises being made by the Democrats. I'd suggest Jim Wallis look into this before continuing to parrot the Democrat's talking points about the costs of the bill.

http://www.washingtonpost.com/wp-dyn/content/ar...

She says the Republicans are closer to the truth than the Democrats as far as their arguments about budgetary impacts . As she says: I hope that the CBO's projections prove correct. I wouldn't bank -- or base my vote -- on it.

In my mind, this is the major problem with this bill - it's going to make the country's shaky fiscal situation even worse while doing little to actually change our current health care system.

Respectfully, I disagree.

"Since January of last year opponents of this bill have never been in a position to 'reset' this bill. It is up to advocates of health care to recognize that their handiwork is a total disaster and hit the reset button in order to salvage something of their own credibility."

That's an excuse, a rationalization for the opponents . They could have pushed hard for an alternative, through the media and even at the town hall meetings. Instead, all they did was scream and shout about "socialism" and basically set themselves up as "the Party of No."

You wrote: "but poll after poll has shown that the American public does not want health care passed along its current lines."

And poll after poll has also shown that the American public wants something to be done to control the health insurance monopoly cartel. The politicians who belatedly want to "reset" are coming off as politicians under the thumb of the hated insurance cartel, coming off as politicians who want to do nothing except to block any and all reform. I really think that the political opponents, mostly in the Republican party, are misreading the American mood on this. If nothing passes and more outrageous stories come out about the insurance companies -- such as more stories of "recission" of policies (see the following link), many of the voters will end up blaming the Repubs who did nothing other than block any reform without any alternative solution.

http://consumerist.com/2009/06/insurance-indust...

I agree. There is good regulation and then there is bad regulation.

In order to buy affordable castastophic healthcare in another state (with $5,000 deductible) at a reasonable price I had to join the NASE and give them $10 month in membership dues to participate. It's a racket.

WaveTossed, since I have been in this position (of pre-existing condition), I believe I am at least somewhat qualified to reply to you. I was diagnosed with a rare liver disease in 1986 and had medical coverage at that time. In 1998 I changed plans to one that would accept me and would pay better than the plan I had. A year later, that company got out of the insurance business completely, leaving me staring at a near-certain liver transplant and no options for health insurance. I spoke to my local insurance agent and he explained to me that each state has a "policy of last resort" that all insurance companied pay into so that if a person with pre-existing conditions want health coverage, they can get it. It was/is administered in our state (ND) by Blue Cross, the state's major company. So my wife and our children got into a regular plan and I got into this "last resort plan." The premiums were manageable and when it came time for my liver transplant a year later and colon removal 3 years later, all bills were paid without any trouble, minus the deductible and co-pay, of course. And no, I am not rich. i am a pastor in a rural town in North Dakota and struggle to make ends meet. My agent told me (correct me if I am wrong) that each state has such a plan for those with pre-existing conditions. I did not read the articles you linked to and you may well refer me to them, but I want to assure you that health insurance IS available for those like me with pre-existing conditions. And no, one does not have to be rich to pay for them. I can't see how my condition is any better than anyone else (if that is an argument against my case) because for the rest of my life I will have annual checkups that run from $3000-12,000/year and anti-rejection drugs that total $12,000/year. But I dutifully pay my premiums, co-pay and deductible, knowing that I am receiving more than I pay in, for which I am thankful.

In Tennessee it is called CoverTN and is administred by BCBS of TN

Yes the dems have resorted to fear and class warfare instead of a apply of reason. But the people still do not want it.

What did the president say that he wanted?
1. To lower cost.
2. You can keep the insurance you have.
3. Will cover everyone.

None of these issues are meet, why is the president for it, since nothing he says that he wants is accomplised.

The elephant in the room is the mandate. A bill with a mandate, and no public option, is straight out a giveaway to big insurance. Poor people will have spend money they don't have to buy a rotten insurance policy with high deductables and high co-pays - because anything better will be totally out of reach. It will end up being worse than no insurance at all, and cause some to go hungry or end up on the streets. Subsidies will not fix it.

I hope the bill fails, I will encourage my rep to vote against it. It is NOT better than nothing, and hopefully, if it fails, in a year or two, the discussion can be taken up again - hopefully by a more progressive congress, with some lawmakers with a spine.