What Happens Without Health Care Reform?
Monday, August 17, 2009 | 0
By Joe Paduda
We know that much of the town hall opposition has been funded by right-wing advocacy groups. What we don't know is what will happen if they are successful in stopping Congress' efforts to pass and the President's to sign a comprehensive health care reform bill.
I'll leave aside the potential impact of bills addressing a "SuperMedPAC," changes to Medicare physician reimbursement, and the possibility that HHS will get a better deal from big pharma. What will our country's health system look like in five years if there isn't reform?
Impact on insurers
Without reform of the insurance underwriting and rating laws, insurers will seek to be even more selective about the policies they write. That's already starting to happen, and is a major reason the larger health plans are losing members this year for the first time in recent history. They just don't want the '"risk" that someone will have a claim. Health plans will also continue to "churn" their books — to try to dump policies that have been in place for more than three years, as that is about when claims start to pile up.Can't blame them, as many are for-profit and therefore more committed to shareholder returns than patient care. That is not a value statement — it is a statement of fact.
The number of viable health plans will continue to shrink. As a mature industry, the health plan business has been steadily consolidating, If anything, that will accelerate. And no, the free market will not increase "choice," we already have a free market for commercial plans (and Medicare Advantage and Part D) and in most areas there are at most two plans to choose from.
Smaller health plans will find it increasingly hard to compete, as the big plans get ever-better discounts from providers, who have to make up the lost revenue by cost-shifting to the smaller plans with less clout. As their costs go up, so will their rates, until they either wither away or get bought out by the big plans.
PPO plans will get "nichier and nichier." Their higher medical costs will push members toward HMO-type plans, making it harder for employers with widely-spread workers to get affordable coverage unless they buy insurance from one of the big plans that operates in all the areas the employer has bodies. Inevitably, some workers will be left with poor coverage.
Impact on individuals and families
Bureaucrats at insurance companies will still be making decisions about what doctors you can see and how much they'll pay and what they'll cover and what they won't. You'll have to ask permission for services, and hope and pray they get paid. Those same bureaucrats will tell you they're interested in keeping you healthy, but that's only till they can churn you out of their book.
There will continue to be a hodgepodge of state-specific insurance mandates, rules, regulations, and enforcement mechanisms, as well as benefit designs and limitations. I'd note that under some of the reform bills under consideration, states will maintain a very significant regulatory role, but the benefit design and other "customer-facing" issues should be simplified.
But the big problem is this: It will get harder and harder for individuals and employers to get insurance coverage.
Here's one all-too-common scenario. The breadwinner loses her/his job, and with it health insurance coverage. They find a new job, but that company doesn't offer benefits as they are too expensive. So, Ms./Mr. Breadwinner, responsible person that s/he is, tries to buy an individual policy. There are several insurers that write those policies, so the applications go in - followed by requests for medical records, documents, and attestations signed by their physicians. Oops, one of the family has a mild case of asthma, and dad takes cholesterol medication, and mom saw a counselor a few years ago after her dad died.
Three insurers decline to offer a proposal, and the one that does will exclude any cardiovascular coverage for dad, any pulmonary issues for junior, and mom won't be covered for any psychiatric or anxiety or related issues. And, oh, the policy is 50% more expensive than the original quote. Leaving Mr./Ms. Breadwinner to decide if they want to come up with $22,000 a year for less-than-full coverage and their HSA deductible (in 2009 dollars).
Unfortunately there isn't any governmental assistance, so the Breadwinners, who make $75,000 a year, are looking at spending almost a third of their gross income on health insurance - insurance that doesn't cover their most likely health problems.
Think this is hyperbole? You're wrong. This is happening every day in every community, and if health reform doesn't happen, it is going to happen more and more often.
Unlike the right-wing fear death panels, this is reality.
As health care costs increase, the number of employers who can afford coverage drops, as does the percentage of their workers willing to pay their share of the premium. And without meaningful reform that includes cost controls, there is zero evidence that costs will moderate on their own. While the cost cycle will persist, without structural change in the form of changed incentives for payers and revamped reimbursement by Medicare we're stuck with the same underlying trend of a couple points higher than overall inflation.
The latest data indicate this is already happening, as the largest health plans lost more than 400,000 commercial members in total in the first quarter.
We're looking at fewer working families with insurance, but there's another problem — as employers change to high-deductible plans, or increase the deductibles on current plans, employees will have to come up with more cash to pay for their care before their insurance kicks in. Fact is, almost one-fifth of Health Savings Accounts don't have any funds in them, and most aren't fully funded (the average account balance was about $950 for individual accounts and $1,500 for family as of the third quarter of 2008). Moreover, that only counts the folks who are enrolled in HSA-type plans who've opened accounts; according to a GAO study, in 2007 almost half of HSA-eligible plan enrollees hadn't opened an account.
The net? More patients without coverage, and a sizable chunk of those with "coverage" don't have funds to pay their deductibles. The result? More indigent care, more unpaid bills, and more trips to the ER instead of primary care doc visits, trips that won't be compensated and will therefore result in more losses for hospitals and cost-shifting to the shrinking population of commercial insured patients.
Specialties that will be particularly hard hit include orthopedics, ophthalmology, dermatology, ob/gyn, neurology, physical therapy and neurosurgery. With many of their patients presenting with non-emergent conditions, these specialists will likely see a decline in patients as those without coverage put off care — that aching knee, slightly blurry vision, skin blotch or loss of sensation will be ignored as much as possible as long as possible. Ob/gyns will see an increase in indigent care, and a potentially considerable growth in patients covered by Medicaid (a notoriously poor payer in many states).
The consolidation in the payer industry will shift more bargaining power to health plans, especially for physician contracts. Hospitals are a little better off, as many have gotten pretty good at negotiating with insurers and their proxies. But for those providers in markets with two or one dominant payer, rate negotiations will become increasingly one-sided.
Swiftboating health reform
Jonathan Cohn writing at The New Republic has summarized what's happening with health reform better than I could. Here's an excerpt:
"Exhibit number one is the treatment of Ezekiel Emanuel, the distinguished oncologist and bioethicist who is working on health reform at the Office of Management and Budget. In the course of his writings, which span academia and popular publications, he has argued forcefully and clearly against physician-assisted suicide. Yet somehow Emanuel finds himself accused of — wait for it — advocating physician assisted suicide...The attack on Emanuel is part of a broader offensive — an effort to persuade anxious Americans that health reformers will harm people who are seriously ill or who have disabilities...Every year, millions of families struggle to get affordable medical care for themselves or their loved ones — and end up in financial ruin, going without medical care, or some combination of the two. Many of these cases involve diseases like cerebral palsy or Parkinson's — or other conditions that require ongoing, expensive care.
Insurance companies try their best to avoid taking on these people. Apply for an individual policy with one of these preexisting conditions and an insurer will reject you if it can. If it can't — if, say, you're lucky enough to get coverage through an employer — you may well find the insurance doesn't cover what you need.
Changing that isn't merely a by-product of reform. It's the whole point of reform. The plan Obama and his allies support would make coverage available to everybody regardless of preexisting medical conditions. It would require insurers to cover a broad range of medical services. And it would police insurers to make sure they didn't try to get around those requirements."
Bob Laszewski, president of Health Policy and Strategy Assoc., has a similar perspective:
"Sarah Palin want-to-be Betsy McCaughey, who had her last 15 minutes of fame during the Clinton health care debate, claims Dr. Emanuel endorses age discrimination for health care services — basically saying he wants to pull grandma's plug.
The National Institute for Health and Clinical Excellence (NICE) actually makes the British system's tough decisions so many worry might have to be made here. For example, last year NICE issued guidance rejecting kidney cancer drugs Sutent (sunitinib), Avastin (bevacizumab), Nexavar (sorafenib) and Torisel (temsirolimus). This leaves patients with only one treatment option — interferon. The reason is these drugs only extended the life of the patient a very few months but they cost about $200,000 to keep a patient alive that long.
Dr. Emanuel is one of the most widely respected health care ethicists in the country. The issues McCaughey is using were quoted out of context and had to do with one of the things Dr. Emanuel gets to think about at the National Institutes of Health — what to do when you don't have enough organ donors for those who want organs.
The question that opponents of reform are ignoring is this: "What happens to me and my family if lose my health insurance? Am I confident that I will get the health care coverage I need at a price I can afford? And when prices double in 10 years, will that still be the case?"
Our current health care system is unsustainable. Opponents of reform who do nothing but lie and have no real solutions will have no one to blame but themselves if reform fails and they can't get insurance or care.
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Joseph Paduda's blog, managedcarematters.com, focuses on managed care for group health, workers compensation, auto insurance, cost containment, health policy, health research, and medical news for insurers, employers, and health care providers. Paduda is the principal of Health Strategy Associates.
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