Many pundits are talking about the Health Care Reform bill in Congress. Very few people have actually read it, including me. In actuality, there are three bills (not just one) currently wending their way through the two houses of Congress.
The piece of legislation that everyone is talking about is HR 3200. It is the longest, and the most liberal of the bills. So I thought that was a good place to start reading. House of Representatives Bill 3200, the 1,018-page behemoth passed in the House, is composed of three large divisions, each having a number of titles. I have slogged through the first section (Title I) of the first division (Division A), which is about affordable health care choices.
Title I sets out to standardize health insurance plans - both individual plans and group plans. While large group health insurance plans have been more highly regulated, historically, individual and small group plans have been flying under the radar for many years, and this is where I personally see the most abuse of consumers by the insurance industry.
The very first thing HR 3200 does is guarantee your right to maintain your current coverage, as long as you continue paying your premiums. So the plan won't scrap anybody's gold-plated plan already in existence. Or for that matter, if you currently pay for a crappy plan, your right to maintain poor coverage will continue for as long as you pay your premiums.
For people who currently do not have adequate insurance coverage, the bill creates a classification entitled, "Qualified Health Benefits Plans" (QHBP) and then sets out proposed regulations to standardize plans and protect consumers from mechanisms used by the insurance industry to avoid payouts.
Standards Guaranteeing Access to Affordable Coverage: Insurance plans will be limited in how much out of pocket expenses they can foist on their clients. Even then, the deductible limits are generous to the insurance industry, with caps on deductibles of $5,000 per individual and $10,000 per family, adjusted upward for inflation in future years. There will be three levels of QHBPs. The standard plan with the least expensive premium, will be allowed to shift about 30% of total cost of care on the insured. The next level up will be allowed to shift around 15%, and the top, or premium, plan will shift only 5% of total cost on the consumer.
Health plans will not be allowed to drop customers who become too expensive, as long as the customer pays his premiums. Nor will plans be allowed to exclude coverage for pre-existing conditions, nor raise premiums drastically on "high-risk" consumers to drive them out of the plan.
Here's what's good about it: in my line of work I have seen dozens of cancer patients who have lost their insurance because they lost their jobs and their group health benefits. If they were able to afford COBRA payments, their COBRA coverage eventually ran out and they were forced to convert to individual policies or lose insurance coverage altogether. Prior to the Stimulus Package, COBRA was unaffordable for most people, as group health plans were allowed to charge up to around 102% of the premium directly to the individual (the extra 2% or so was to cover the administrative costs incurred by the company). While most companies don't take this extreme option, they still shift most of the premium burden onto the individual, often making insurance unaffordable, especially when the individual is unable to work because of the illness.
When a patient's COBRA is converted to individual insurance (or if the patient was a small business owner or self-employed and already had individual insurance) then all bets are off. Because the protections built into group health regulations don't exist in the individual insurance market.
Individual plans are allowed to increase premiums annually (sometimes more frequently) based on the individual's history of claims. In most states, individual plans are allowed to exclude coverage for pre-existing conditions, often for more than a year, and in a few states indefinitely. Thus, if you were a cancer patient who was dropped from her individual insurance plan, you might attempt to purchase another plan on the open market, only to find that you lived in a state where the insurance company was allowed to exclude your cancer diagnosis for a year. Or forever. Health insurance, at that point, isn't worth the investment, since the main driver of your health expenses - your cancer - won't even be covered by the health plan.
Under the proposed reform to health insurance practices, insurance companies will no longer be allowed to discriminate against consumers based on pre-existing conditions. And premiums, as well as premium increases, will be regulated so insurance companies can't use premiums as a back-door way of firing their expensive patients.
What's bad about it: By itself, the prohibitions against excluding and dropping patients and against charging exhorbitant out-of-pocket rates aren't bad at all, and are prohibitions that the insurance industry can probably absorb. The problem is the number of restrictions that this bill places on insurance companies (and we'll visit more of these restrictions in later posts). Insurance companies are still for-profit businesses, and they have to be able to thrive and pay dividends (or at least grow in value) . If the government increases the regulatory burden on insurance companies to the point that they all become unprofitable, we will face a crisis in the health care financing infrastructure.
Some of my readers believe that the more liberal elements of the Democratic party secretly want this to happen, in order to usher in the Golden Era of the Single Payer Health Care System (or in their minds, the return of Stalinist centralized socialist economy). Well, truth is, some liberal Democrats do want this. But I don't believe President Obama or most of Congress really want to sneak in a single payer healthcare system by decimating the private insurance industry. Doing it in an underhanded way as this would only create chaos and anarchy for a period of time before a "government-run" health care system could rise from the ashes.
No, if this bill triggers an economic crisis in the insurance industry, it won't be because of some dastardly secret plan to destroy the free market. It'll just be the government's uncanny talent for creating more formidable unintended consequences than intended outcomes.
We have a good bit more to cover on Title I of Division A, but I'll save that for another night, as this post is already getting overlong.
Coming up:
Subtitle C—Standards Guaranteeing Access to Essential Benefits - the Health Choices Commission standardizes benefits
Subtitle G—Early Investments - reinsurance plan guaranteed by a $10 billion trust fund provides security for group health plans covering retired employees who are not (yet) eligible for Social Security (or "Rick Waggoner, couldn't you have held on two more years?")
. . . and much more!
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment