Wednesday, August 05, 2009

What if you picked a fight and nobody came?

Jay Bullock wonders why he's not getting any response to a post which, in his view, called "half of the conservative cheddarsphere liars." (Actually, his post attracted a good number of comments for a local blog.) At issue is a list of claims about HR 3200, the Orwellian named "America’s Affordable Health Choices Act of 2009."

Claims on the list have been advanced by local conservative bloggers, but it actually comes from Liberty Counsel and a blogger named Peter Fleckenstein.

First, I'll give Jay some credit. From what I can see, the list is not a very strong piece of work. Some of the claims are wrong and others relate to valid criticisms of the Act's likely impact, but are not required by the Act itself. Still others are phrased in a very polemical way.

I haven't - and wouldn't - link to the list, so I guess I haven't been called a liar. Nor do I want to debate how good or bad the list is. It is not the issue. The proposed legislation is.

But Jay hasn't scored the points that he thinks he has.

For example, one of the "lies" (or so says Jay)are claims that health care will be rationed and the the government will decide what treatments and benefits are covered. Jay's response, essentially, is that the federal government will set only minimum standards and he is right to say that the language cited does not literally call for rationing and limitations.

But its not at all clear that the legislation would only set floors and not ceilings. In fact, that seems highly unlikely. Sec. 142 of the Act empowers the Health Choices Commissioner to set standards. Sec. 123 empowers a committee to make recommendations regarding qualifying plans to the Secretary of HHS. Nothing says that these recommendations and standards are limited to setting minimum qualifications.

In fact, one of the selling points of the plan is to reduce costs by adopting "best practices" which will necessarily mean deciding that some things ought not to be paid for. (As the President put it, preferring the cheaper blue pill to the more expensive red pill.)Anyone who actually has to take pills to alleviate a chronic condition knows that it's hardly that simple.

While it may be that these limitations will only formally apply to the public option, it's not that simple. First, to the extent that people get thrown into the public option, those restrictions on reimbursement become restrictions on their care. Of course, any contract for insurance is going to have restrictions on care. No insurer or employer can promise to pay for anything and everything, the fear here is that, if a public option drives out private alternatives (more on that later), then there will no longer be competitive discipline on the substantive provisions of insurance. Today, if you don't like what your employer has chosen, you can complain and employers - who use health care plans to compete for employees - can and do choose something else. To the extent that a public option becomes the - or one of the - only games in town, that won't be as likely.

Beyond that, to set minimums - particularly if they are extensive - is to set maximums. If you mandate extensive coverage for drug and alcohol coverage, you are either going to drive up the cost of the policy or cause something that isn't mandated to be dropped in order to meet an acceptable price point.

Jay refers to a "lying" editorial in Investors Business Daily that, in his view, falsely claims that the bill outlaws individual private insurance plans that do not meet government minimums. It does not, he says, because existing policies are grandfathered and they are - as long as the insurers don't sign up any more policy holders. In other words, if you have a policy and the company is willing to close its book of business, you'll have no problem. Otherwise, its to the exchange for you.

And the exchange is going to mandate a particular type of policy. Broad coverage and low deductible. The opportunity to save by buying bare bones coverage will be limited and the cost controls that will exist are likely to come by restricting care in ways that are not politically (as opposed to medically) harmful.

Jay repeatedly says that the plan leaves private employer provided insurance alone and that the public option is not subsidized. But that's true only in the most technical sense. No one really believes that the existence of a public option paying medicare rates will not impact private plans. Whether or not the public option turns out to be subsidized will depend on that impact. Will private plans subsidize the public option as they currently subsidize medicare? How will the credits provided to people who cannot afford insurance interact with the setting of "standards." i.e., will they be constructed in favor of the public option?

He is, of course, correct in that the bill does not call for "mandatory" end of life planning. It only provides that such planning will be paid for - presumably in ways that it is not today. (Having dealt with the death of two elderly parents - my Mom and Karen's Dad - there certainly was a lot of discussion of those matters.)

Of course you get what you pay for and that may not be all bad. But it is not surprising that there would be a certain sensitivity about the issue given the President's remarks about limiting care for those with limited life expectancy and the experience with that type of thing in other "universal care" schemes.

Jay can't understand why employers would drop coverage to pay the 8 % tax when nothing prevents them from dropping coverage now. He calls the suggestion that this is "the dumbest thing he has ever heard" which is a big claim from a high school English teacher.

But its not dumb at all. Currently employers who don't offer health insurance are at disadvantage in competing for employees. Because folks need to get their insurance from their employer, many will not consider positions that they might otherwise take if there is no insurance available. If there is an alternative, this becomes less of a disadvantage and some my choose to drop coverage. That possibility will be exacerbated if the public option undercompensates providers and drives up the cost of public plans.

Jay says he bets private companies come up with plans that undercut the 8 % tax for employers who don't provide coverage. That might happen if the mandates for coverage (the "essential minimums") don't make that impossible. I suspect that they will.

In a comment following his post, Jay touts medicare. Why do providers accept medicaid patients if the rates are so bad? Of course, some don't. But, for those that do, it is possible to engage in price discrimination since medicare and medicaid aren't open to everyone. We wind up subsidizing medicare and medicaid with our health care dollars as well as our tax dollars. With a public option available to everyone, that becomes more difficult and I have written elsewhere on why that may be a big problem.

He repeats the notion that medicare is a "model of efficiency" due to lower administrative costs. He counts it a virtue that Medicare, having overcharged for years to create a surplus that the government has squandered, has not charged even more. The administrative cost advantages of medicare may be exaggerated but its not surprising that they are there. It doesn't take much work to say "take it or leave it." Medicare is going bankrupt but Jay thinks it a selling point that this won't be for a few years.

I'm not sure that Jay should want a fight.

20 comments:

Seth said...

Today, if you don't like what your employer has chosen, you can complain and employers - who use health care plans to compete for employees - can and do choose something else. To the extent that a public option becomes the - or one of the - only games in town, that won't be as likely.

This is where your market-based argument seems to fall off the tracks. If the public option undercuts private options on services, and the services it cuts are desired, then it should follow that there's still a place in the market for those private options. Sure, employers may see a cheaper route with the public option and, as a result, only offer that as an option for employees. But then it follows that the employer will be reducing its health care costs, which the labor market -- if it's working the way free marketers always say it does -- should require to go back into compensation in some way, likely wages. And, then, if there is demand for the services offered by the private plans, the employee could take those extra wages and put them into a higher priced private plan or private supplemental insurance that could develop in reaction to the new health care marketplace (see Medigap today).

And that's really the worst case scenario, at least from the conservative perspective. That is, the scenario where the public plan 'squeezes out' private plans and subsequently rations care that is desired on a widespread basis, which is hardly agreed upon by experts as a likely scenario.

Later, interestingly, the issue becomes not concern over the plans in the exchange offering too little, but rather too much...

The opportunity to save by buying bare bones coverage will be limited and the cost controls that will exist are likely to come by restricting care in ways that are not politically (as opposed to medically) harmful.

Not knowing exactly what you mean by 'bare bones,' I'll only say -- as a relatively healthy young person -- that minimum standards are required to make community rating work. Sure, you could skim all of the healthy folk into a bare bones plan, which will be fine as long as they stay healthy (which pretty much none of us do), but that only serves to increase costs on the meat-on-the-bones plans that are required for the less and non-healthy, probably to the point of making it unaffordable for many or most.

Medicare is going bankrupt but Jay thinks it a selling point that this won't be for a few years.

Yeah, health care for the ballooning elderly population is expensive. Just ask the private insurers pleading to protect Medicare Advantage.

Rick Esenberg said...

Before I respond, what's the point of insisting on a public option? I'm serious. It can't just be competition because we have that.

Seth said...

Glad you asked. I could care less if the final bill includes a public option. And I think the president feels the same.

The goal is eliminating currently dominant industry practices like this:

The top priority of for-profit companies is to drive up the value of their stock. Stocks fluctuate based on companies' quarterly reports, which are discussed every three months in conference calls with investors and analysts. On these calls, Wall Street looks investors and analysts look for two key figures: earnings per share and the medical-loss ratio, or medical-benefit ratio, as the industry now terms it. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits.

To win the favor of powerful analysts, for-profit insurers must prove that they made more money during the previous quarter than a year earlier and that the portion of the premium going to medical costs is falling. Even very profitable companies can see sharp declines in stock prices moments after admitting they've failed to trim medical costs. ...

To help meet Wall Street's relentless profit expectations, insurers routinely dump policyholders who are less profitable or who get sick. Insurers have several ways to cull the sick from their rolls. One is policy rescission. They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment. Asked directly about this practice just last week in the House Energy and Commerce Committee, executives of three of the nation's largest health insurers refused to end the practice of cancelling policies for sick enrollees. Why? Because dumping a small number of enrollees can have a big effect on the bottom line.


Adding: "They also dump small businesses whose employees' medical claims exceed what insurance underwriters expected. All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year's premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether--leaving workers uninsured. The practice is known in the industry as purging. The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has fallen from 61 percent to 38 percent since 1993, according to the National Small Business Association. Once an insurer purges a business, there are often no other viable choices in the health insurance market because of rampant industry consolidation."

If eliminating those practices can be done with some less invasive form of regulation than a public option, then fine, let's see it. And I'm not saying the enemy is profits. Profits are fine. But when practices become profit-driven at the expense of something as morally and economically important as access to affordable health care, then regulation and change becomes imperative.

Maybe cooperatives are an acceptable solution, but that remains to be seen. What's certainly not the answer is the "Ryan plan" (formerly known as the McCain campaign plan and before that the Bush plan).

Jay Bullock said...

That's an awful lot of words (I shouldn't talk, I know) to say, essentially, "Everything Jay says is true but I don't like it."

Note, first, that conversation in the main post of mine didn't pick up until I challenged people on it with the second.

Second, this:
In fact, one of the selling points of the plan is to reduce costs by adopting "best practices" which will necessarily mean deciding that some things ought not to be paid for.
And if the QHBP committee says, "you must cover X because it works, but you don't have to cover Y," there is nothing to stop a private plan from covering Y, anyway, for individuals or businesses that feel Y is important. One of the most amazing things about this debate is the usual insistence among conservatives that there is too much wasteful government spending (like the mythical $900 hammer), and yet when it comes down to a plan that says, let's figure out what's really effective and efficient, conservatives scream "rationing!" even though it's not.

Third, this:
[T]he exchange is going to mandate a particular type of policy.
No, it doesn't. It mandates a that a policy meet minimum standards, but not that a policy meet only those standards. I have a hard time believing that multi-billion-dollar industry lacks the creativity and ingenuity to design plans that appeal to individuals and employers more than the public option; in fact, I'm quite certain some enterprising souls out there will design a plan that offers public option-like bare bonesness but at a lower price than the 8% of payroll employers would pay as a fine for offering no coverage at all. Again, it surprises me that conservatives with so much trust in the marketplace normally have such animus toward a bill that by design encourages greater competition.

Which reminds me, fourth, this:
It can't just be competition because we have that.
But we don't. 94% of markets in the country are highly concentrated. There are some states in the country where just two companies underwrite upwards of 90% of all policies. That's ridiculous.

And this:
But it is not surprising that there would be a certain sensitivity about the [end-of-life counseling] issue.
What do you mean? It was introduced as a bipartisan bill in the Senate with broad support (including the AARP) and no controversy. That now a bunch of people are up in arms about it is a surprise--although, I guess if Congress had known that this bill would be read by a bunch of people who utterly lack reading comprehension, they might have predicted it.

Finally, you're right about one thing: The dumbest thing I ever heard, really, was a girl who slept through her final exam (thus failing the semester) who told me, afterwards, "If I had known it would count, I would have done it."

Rick Esenberg said...

Let me start with Jay.

No, actually I think that you are wrong about ObamaCare. It may be true that a private plan can offer additional coverage but there is no way to tell that from the bill. You are assuming that the setting of standards and definitions of a qualifying policy will only specify minimums. Nothing in the bill says that. I can imagine, in particular, that "affordability credits" might not be available for overly expensive plans.

But the real danger is in the monopsony power of the government and the impact of mandates. You can argue that classical economic theory doesn't apply here, but I don't see why not.

As for why there would be sensitivity over end of life counseling, I give you the President's own comments.

As for competition, I have no idea how you are defining a market. As I've blogged before, the company that most people think of their insurance company isn't providing insurance at all. It's paying claims with the employers money. But there are 1300 insurers in the US. I'm think that one more doesn't increase competition. In fact, given that it is likely to have monopsonistic power, it will, in fact, decrease it.

Dumping sick employees is illegal unless they have lied about being sick. (But find me a company who is systematically doing this in violation of the law. I'd like to find some money for a vacation home.) For ERISA plans, it is, for the most part, not even possible. You can't deny people who had qualifying coverage prior to enrollment or who get sick after an initial period has passed.]

Coverage for small businesses is a problem. In fact, tying health insurance to employment is a problem. I also agree that "free riding" by young and healthy people is problematic because, contrary to the harsher rhetoric of single payer proponents, people who lack coverage are not, for the most part, denied care. We aren't going to let you die in the street, so maybe you have an obligation to provide for a rainy day which, in the case of health care, is almost certain to come.

Seth said...

Dumping sick employees is illegal unless they have lied about being sick.

Like the former CIGNA exec said in his testimony, "They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment."

But find me a company who is systematically doing this in violation of the law. I'd like to find some money for a vacation home.

Ask, and and you shall receive: "The [California Department of Managed Health Care (DMHC)] has fined [Blue Cross of California (BCC)] $1 million after finding that it systematically and illegally canceled policies held by chronically ill and pregnant policyholders. Under state law, California health plans may only cancel individual policies if a policyholder intentionally lied on an application to cover up a pre-existing medical condition. But BCC violated this standard regularly, using computer software and an entire dedicated department to identify and cancel the policies held by pregnant women and chronically ill patients regardless of whether they intentionally lied on their applications, the DMHC concluded."

I also agree that "free riding" by young and healthy people is problematic because, contrary to the harsher rhetoric of single payer proponents, people who lack coverage are not, for the most part, denied care.

If the pot-shot at the left helps you agree that a bare-bones option within health insurance reform is problematic, fine.

Dad29 said...

Many of Jay's "truths" are contingent truths.

IOW, the bill provides money for States which 'provide end-of-life counseling,' or which 'provide "birth-spacing" counseling,' etc.

The bill does not MANDATE these payments to States.

Nor did the Federal auto-safety law MANDATE seatbelt wearing.

IOW, the bill incentivizes States to do the dirty work.

Further, the bill is silent on other odious possibilities (such as forcing taxpayers to subsidize abortions.) That means that either an administrative decision OR a ginned-up court case will effect exactly that: forced payments from taxpayers for abortions.

We are also well-aware that the (D) proponents say that "this is not single-payer."

Uh huh. They have also stated, clearly, their intent to FORCE single-payer by bankrupting private insurance companies. Most recently, T. Baldwin; earlier, B. Obama.

There are lies, damned lies, lies-with-statistics, and lies of omission. Jay has run that table.

Super Id said...

Rick,


"We aren't going to let you die in the street, so maybe you have an obligation to provide for a rainy day which, in the case of health care, is almost certain to come."

I'm not so certain, just look at the words of Ezekiel Emanuel, a healthcare advisor to the Obama administration and Rahm Emanuels’ bother:

“Conversely, services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia”

An essay published in the Hastings Center (Nov-Dec 1996) by Emanuel, Norman Daniels and Bruce Jennings.

Seth,
"The [California Department of Managed Health Care (DMHC)] has fined [Blue Cross of California (BCC)] $1 million after finding that it systematically and illegally canceled policies held by chronically ill"

You can sue private companies to enforce the law, which ensures that they work for the most part. But if we have a national health, who is left to sue?

Seth said...

You can sue private companies to enforce the law ... But if we have a national health, who is left to sue?

Are you suggesting a public option wouldn't follow the letter or intent of the law? And that, if it didn't, citizens would have no recourse in the matter?

Anonymous said...

What about the people that do not want a public or private option.
(45 million w/o)

Shouldn't there be a plan for them? Something like medical accounts.

Super Id said...

Are you suggesting a public option wouldn't follow the letter or intent of the law? And that, if it didn't, citizens would have no recourse in the matter?

I'm suggesting that it is suspetible to political interpretation. As proof, just look to the various interpretations of bill that have been advanced.

And yes I'm saying that citizens would have little recourse. I just don't see a faceless beauracrat fearing a punitive damages suit.

Seth said...

As proof, just look to the various interpretations of bill that have been advanced.

I'm not sure what I described with BCC in California has to do with interpretations of bills, let alone laws. Besides, the disagreements now aren't about various interpretations, they're about various visions for what should be included in the bill.

I just don't see a faceless beauracrat fearing a punitive damages suit.

I have very little patience for banal anti-government positions. It seems the health insurance debate has become a proxy issue for a number of conservatives to rail against government for the sake of railing against government, as opposed to truly finding away to address the current health insurance situation that no one seems to argue is unsustainable. I'm not interested in those types of side-shows. And the same goes for blatantly anti-business screeds that rail against the value in having any private payers in the system, claiming single payer or bust.

Bottom line, if you honestly think that citizens would have no control over a public option, or at least as much control as a participant has over a private option, thereby making it a moot point at best, then I guess we'll just need to agree to disagree.

Super Id said...

Seth,

My position is not based on anti-government banalities, it is based on law.

Suits against the government must be made under the Federal Tort Claims. No punitive damages are allowed against the government. If private insurers violate the law, they have face severe repercussions. l'm not saying that it doesn't still happen, but at least there is a recourse and a disincentive.

Ultimately, we will be talking about what is going to be covered under a government health care plan. Under MedPac, 5 individuals would set all the medicare reimbursements. If there are no reimbursement for a procedure, rest assured that procedure will not performed. What recourse do we have if those 5 members decide not to fund certain procedures? Not much.

Seth said...

For starters, MedPAC is made-up of 17 members. Second, speaking of law, Congressional approval is required for MedPAC recommendations. If you're referring to the newly-proposed Independent Medicare Advisory Council (IMAC), that would be five members, but those members would be appointed to 5-year terms by the president with consent of the Senate, and any recommendations it offered would need to be approved by the president and pass Congressional oversight.

Third, MedPAC and IMAC apply to the public option we already have, Medicare, not the public option that would be included as part of the health care exchange. The public option as part of the exchange, at least as outlined in the House bill, would run through the Department of Health and Human Services and offer at least three levels of benefits -- basic, enhanced, and premium (with the potential for a premium plus option). And the public option, like all private options in the exchange, would be managed through a new independent agency called the Health Choices Administration.

But, again, if there's concern about a public option cutting reimbursement for desired services, or, I guess, lacking the ability to sue for punitive damages, that leads back to my opening point in this thread that it should follow that there's still a place in the market for private options.

I'm glad to hear your comment wasn't based on an anti-government position. But let's just keep in mind it was 'faceless bureaucrats' at the California Department of Managed Health Care, supposedly not accountable to anyone, who challenged and fined BCC after it systematically cancelled the policies of pregnant women and the chronically ill in violation of state law.

Dad29 said...

It seems the health insurance debate has become a proxy issue for a number of conservatives to rail against government for the sake of railing against government

Umnnnnhhhh....actually, the 9th and 10th Amendments "railed against Government," Seth.

Off-topic reminders: The Gummint now has substantial ownership in two auto companies, a threatening bond-holding position in dozens of Banks, and effective control of one of the world's largest insurance companies.

There are plenty of very good reasons to resist Government charter-creep which are not "railing."

And HR3200 embodies dozens of those reasons.

illusory tenant said...

"Everything Jay says is true but I don't like it."

Because you're only right in a technical sense.

George Mitchell said...

At least 2/3 — maybe 3/4 — of Americans are satisfied with their health care options. There are many ways to address the needs to those who truly are disadvantaged. ObamaCare is a huge overreach. Whatever does pass will bear little resemblance to the original House bill. All of this trumps Jay Bullock's effort to debunk some of the plan's critics. He should hope ObamaCare flops to avoid the political backlash that will occur in 2010.

illusory tenant said...

Mightn't one actually need to have health insurance in order to be satisfied with it?

Anonymous said...

which are not "railing"

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