Saturday, December 07, 2013

The Mess We're In (Part II)

We hear stories these days, both on national and on local news, how some poor soul lost her health insurance “because of Obamacare.” These stories infuriate me because it makes it sound as though solid full coverage health insurance policies are being cancelled…just because President Obama pushed through a law designed to expand health insurance coverage.

The problem with these stories is at least two-fold. First, since we don’t know who these people are, we have no idea why they lost their health insurance or what kind they had before they lost it. Second, as anecdotes, the stories are engaging, but anecdotes make lousy policy. What makes good policy is understanding what the ACA is intended to do.

President Obama made a statement, that has been characterized as a promise, that "if you like your health insurance plan, you can keep it.”

What President Obama should have said is that with the ACA, if your health insurance is cancelled, that is you lose it, you can get a new policy. He most certainly misspoke. Sadly, his statement obscured something too many people do not know—before the ACA was passed, you could have your health insurance policy cancelled for many reasons. And before the ACA you might not be able to get new coverage.

Ezra Klein, in a recent blog ran some of the reasons why people can lose their health insurance.
If you're one of the 149 million people who get health insurance through your employer, you can lose your plan if you get fired, or if the H.R. department decides to change plans, or if you have to move to a branch in another state.
If you're one of the 51 million people who get Medicaid, you could lose your plan because your income rises and you're no longer eligible or because your state cut its Medicaid budget and made you ineligible. You could lose it because you moved . . .
If you're one of the 15 million Americans who buys insurance on the individual market, you could lose your plan because your insurer decides to stop offering it or decides to jack up the price by 35 percent. And that's assuming you're one of the lucky people who weren't denied coverage based on preexisting conditions in the first place.
So the outrage that some of the pundits on television are voicing is at best disingenuous, and at worst thoroughly misleading. President Obama, and the ACA, are NOT the true reasons people’s health insurance policies are being cancelled. The real reason is the standard practices of health insurance companies, and the hodge-podge system we have for health insurance.

What the ACA does—or perhaps it is better to say attempts to do—is provide a baseline of what an adequate health insurance plan would look like.

In the past, people in the individual insurance market, and perhaps even employers, shopped for health insurance trying to cut deals which would lower the premium costs. So some plans have been written with incredibly high deductibles—the amount a person has to pay before health insurance kicks in. Or some plans only cover certain services and exclude others. For example, excluding maternity services. Or excluding hospitalization all together.

The essential services required under the ACA are listed here. So, any plan that does not include these services would have to be rewritten to include them. That is a reason why someone’s health insurance might be cancelled now. Sub-standard and inadequate health insurance policies now have to meet a baseline of coverage, and if they don't, those policies have to be re-written to include the essential services.

What has really occurred over the last 30 or so years is an increasing fracturing of how health insurance policies are crafted. When health insurance began, the concept was simple. But with more and more add-ons, with increased specialization, with advances in medical technology, with new drugs being introduced, health insurance companies responded by offering to CONTRACT plans, rather than expand them.

Perhaps the most heinous practice that limited who got health insurance was the denial for pre-existing conditions. The result was a cruel Catch-22—just when you need insurance, you can’t get it because you need it.

As health policies undergo an annual review, and an employer is told what the premiums will be to continue to cover the employees, there have been many instances where employers have asked to help bring down costs. Reducing the number of services covered was one way to do that. Some areas of care have really been “nickel and dimed”, for example mental health services, or the rules governing how services can be accessed have been tightened. Many of us have experienced a health insurance plan that includes pre-certification.

Shana Alex Lavarreda, Ph.D., director of health insurance studies for the UCLA Center for Health Policy Research, said it best when she pointed out that before the ACA was enacted, there was "a race to the bottom, with insurers cutting benefits to lower premiums. The essential health benefits set a standard for insurance. Anything below that is not true health insurance."

To lower premium costs, what health insurers were really doing—and what employers were accepting—is offering less for the same premium price. As more and more health costs were uncovered by health insurance, the individual was left having to pay but with no way to be able to pay. And people who had onerous health bills began to go bankrupt.

That is why the way the news coverage about the ACA drives me nuts. We have seemingly forgotten the people who have been bankrupted by out of control health costs. We have forgotten people who were denied coverage because they had pre-existing conditions. We have forgotten that, despite lofty statements that we don’t want a health care system that rations health care (which is how some people view a national health insurance system), we DO ration health care—if you don’t have health insurance you cannot and do not get adequate consistent life-saving health care.

(One more entry on this topic—I will share the findings of a report about how Americans interact with our health insurance system)