Mike Huckabee's Public Option

If you watched HBO’s Real Time with Bill Maher on November 12th, you heard Mike Huckabee propose a public option as part of a health reform fix.  With “repeal, revise, and replace” stories in the news every day, shouldn’t this be worth at least one national headline? 

Governor Huckabee didn’t just flirt with the public option; he married it to his opposition to requiring insurers to cover people with pre-existing conditions.    

Defending his position, Huckabee argued “when you buy insurance you’re buying something in the private sector.  Now maybe there’s a place to say if you’re really, really sick and you can’t access a traditional marketplace then should we have some form of safety net?  Yeah. I’ve said that; I did that when I was Governor.”  

He called for “a partnership between government and the private sector” to insure people with pre-existing conditions. So what did Mr. Huckabee propose? 

He cited the Arkansas TEFRA program he started for families of children with serious chronic conditions as the model safety net program he would favor for people with serious illnesses.  In that program, Arkansas allowed families earning between $25,000 and $200,000 per year the option of buying into the state’s Medicaid program by paying annual premiums of between $504 and $5,500.  After the family paid the premium, the state and federal government paid the cost of the care.

If you expand the Medicaid program and use means testing to include people with serious illnesses, this is about as public an option as you can get – even if you pass it off as just a “safety net.”

How Many People Have Serious Chronic Conditions?

How many people could this public option affect?  The answer is surprising – well over 100 million if he covered just those with serious medical conditions, and up to half of all Americans if he offered the option to all those with chronic conditions. 

I’m one of them.  Like 55 million other adults, I suffer from chronic back pain.  In the past twenty years, I’ve been to doctors, hospitals, and physical therapists for it, and taken prescriptions and over-the-counter pain medications.   

Back pain is inconvenient, but hardly life-threatening.  It could be different for me.  I could be one of the almost 75 million Americans with hypertension.  They may not have outward symptoms like I do.  But if they don’t manage their condition, it could lead to serious health consequences for them. 

Or things could be worse.  My condition could be serious and costly.  I could be one of the 100 million or so Americans with at least one serious and even life-threatening condition who need ongoing treatment.

I could be one of the 34 million with asthma, the 30 million with heart disease, the 24 million with diabetes, the 14 million with serious mental illness, or the 12 million with cancer. 

Death Sentences?

When insurance companies refuse to insure these people because of their conditions, they give some of them a death sentence. 

This isn’t an exaggeration.  Without insurance, many people can’t even afford the tests for their chronic conditions, much less the treatment. 

Consider this:  A member of my family had a bout with cancer a few years ago, and the treatment cost well over $100,000.  She now has annual diagnostic tests to make sure the cancer hasn’t returned.  The price of this year’s tests was exactly $3,171.20.

If she were uninsured, she would have had to find the money for the treatment and the tests.  If she couldn’t afford the treatment, why do the tests?  If she couldn’t even afford the tests, then she would be gambling with her life.   

Why Sick People Need Insurance the Most

Insurance does two things for us when we’re sick, and this is why the sickest people need insurance.

It doesn’t just pay most of the cost; it also negotiates down the price for tests and treatment.  My family member’s insurer negotiated the price of this year’s tests down from over $3,100 to just over $1,400.

Taking on both roles costs insurers money.  That’s why requiring insurers to cover people with chronic conditions draws opposition from Mr. Huckabee.  He prefers a publicly-funded safety net.

This past summer, insurance commissioners in Florida, California, Michigan, Virginia, and Nebraska all said that they did not have the authority to enforce the consumer protection provisions of the health reform law. 

If they don’t enforce these protections, or if Mr. Huckabee were to convince Congress to repeal some of them, then what will people with pre-existing conditions do?  Their only alternative would be something like Mr. Huckabee’s public option.  As a credible conservative voice and leading Republican Presidential candidate, will he be willing to sell this public option to a broad national audience, or was this just a one-night stand for him? 

The Battle Over the Biggest Consumer Protection in Health Reform

Health insurance reform is being implemented now, and it's no surprise that there’s a big battle going on pitting consumers against insurers.  The surprise is that the state regulators charged with protecting consumers are siding with insurers on some key issues.

The Biggest Consumer Protection in Health Reform

If you ask 100 people what the biggest consumer protection in the health reform law is, I would guess that fewer than 10 of them would tell you it’s the loss ratio mandate.

The what, you say?   We know about lifetime caps and pre-existing conditions and minimum benefit packages.  Few of us know about “loss ratios.” As we’ll see, consumers have a lot at stake in the loss ratio battle, including – for some – hundreds of dollars of premium costs per month. 

What’s a loss ratio?

What’s a loss ratio, and why should you care?  Simply put, a loss ratio is the percentage of dollars taken in through premiums paid back out in benefits.  For example, if a plan pays out $75 in benefits for every hundred dollars in premiums, then the plan’s loss ratio is 75.

The reason we should care is because when loss ratios are higher, consumers receive more benefits.  Medicare’s loss ratio has been calculated to be as high as 97.  Paying out up to $97 in benefits for every hundred dollars in premiums is the gold standard for consumers. 

Private insurers can’t touch Medicare when it comes to expenses.  They have higher administrative costs and also need to make a profit.  To make sure they pay out enough, public officials establish a minimum loss ratio through regulation.  Insurers can only sell policies that meet this minimum standard.      

This is enough about loss ratios.  To prevent our eyes from glazing over, from now on I'll just call them “the biggest consumer protection in health reform.”  

 What Congress Decided about the Biggest Consumer Protection in Health Reform

 The 2010 Federal law created a national standard for the biggest consumer protection in health reform.  Advocates initially asked that the standard be set at 90, but Congress considered this too high, and ultimately agreed to 80 for individual plans and 85 for large group plans.  This means that Congress decided that giving private insurance companies a 15-20% allowance for administrative expenses and profits was fair.

These new standards are set to take effect in a few weeks, on January 1, 2011.

A Battle Rejoined

While the battle over the biggest consumer protection in health reform got little attention in the spring, it erupted into a full scale war over the summer.

Insurers amassed their forces to get at least some relief from the biggest consumer protection in health reform and found two allies, health insurance agents and state insurance commissioners. 

Agents thought that they would be squeezed out of their commissions by insurers when the new law took effect.  They were right.  Insurance companies began to cut agent commissions almost immediately.  In response, insurance agents argued that they were primarily consumer agents, not insurance company representatives.  They asked HHS to count their 3-4% commissions as benefits to consumers instead of as administrative expenses, and asked state regulators to support them. 

The other group sometimes siding with the insurers was politically more powerful – the state insurance commissioners charged with implementing the new standards. 

As reported in Health News Florida in late September, Florida Insurance Commissioner Kevin McCarty, President-elect of the National Association of Insurance Commissioners (NAIC), took the lead in making the case against the biggest consumer protection in health reform, arguing that he was “concerned about the ability of our individual carriers to meet that standard in a seamless, non-disruptive manner.”  Florida’s current standard is only 65 for traditional insurance plans, and 70 for HMOs, far less than the new federal mandate.

This means that traditional insurers in Florida can keep up to 35% of premiums for administrative costs and profits.  If your monthly premium in Florida is $1000, then up to $350 of that can be kept by the insurance company.

That’s a lot of money for companies to give up.

What’s Going to Happen?

In mid-October, NAIC submitted its draft recommendations to HHS, which is now finalizing them.  NAIC elected not to support the agents’ position, leaving agents to fend for themselves.

But NAIC did ask HHS for a phase-in of the biggest consumer protection in health reform, staking out an anti-consumer position.

Why do this when your job is to protect consumers?  President-elect McCarty argues that some plans will otherwise go out of business, reducing consumer choice.  But isn’t that the idea?  If the plan’s expenses or profits are too high, then it’s not a good choice for consumers.  That plan should go out of business.  It’s really just that simple, if protecting the American public is the goal.       

How Eric Cantor is Missing It

Discussing health reform over the weekend, House Republican leader Eric Cantor told the New York Times that “it is my intention to begin repealing it piece by piece, blocking funding for its implementation and blocking the issuance of the regulations necessary to implement it.”

Congressman Cantor’s Problem

To which “it” does Congressman Cantor refer?  The “it” creating a new long term care insurance program so that elders will be able to fund nursing or home care as they age?  Or the “it” creating a new catastrophic care insurance plan so that healthy young people will be able to afford some insurance coverage as they age out of their parents’ plans?  Perhaps it’s the “it” that provides new grants to community health centers, or the “it” providing new training for primary care physicians to recognize and treat chronic conditions, or the “it” creating thousands of needed new jobs in the health care workforce. 

Congressman Cantor’s problem is that there isn’t an “it” to be repealed piece by piece. 

He seems to confuse the health legislation itself with its substantive parts, as if it were like one giant private corporation that could be cut up into its constituent parts and sold off piece by piece until nothing remained.  The substantive components of the health reform bill, however, are more like dozens of small businesses, each independent of the other and every one of them providing a product that meets a consumer demand.

Consider the real implications of Mr. Cantor’s position:

·         Is he proposing to block the regulations that will reduce costs to the Medicare program over the next ten years, thereby raising the cost of federal government?  That’s hardly fiscal conservatism; it sounds like wasteful spending to me.

·         Or is he proposing to block the funding that will reimburse state governments for new costs to their Medicaid programs, thereby pushing a new unfunded mandate onto the states? 

·         Or does he hope to delay implementation of the provisions of the legislation that will add 30 million people to the insurance rolls, and replace these provisions with the proposal he backed that would insure only a small fraction of them?

Insured Consumers Pay for the Uninsured 

It’s most likely delay Mr. Cantor has in mind, but while it might be good politics to argue for “piece by piece” repeal as he had done, or “repeal and replace,” like his colleague, Rep. Paul Ryan, our health policy matters to us more than just as taxpayers or health care consumers.  This is because everyone’s cost of care is connected to everyone else’s.  None of us sits on a health care island. 

One of the biggest hidden prices we pay each year is the portion of our health insurance premium that pays for people who have no insurance.  Since someone has to pay for the care we all receive, it stands to reason that the smaller the number of people who are insured, the higher the costs will be for those of us who are – unless, of course, the government were to pay more than its fair share of health care costs.  But it doesn’t. 

Historically, Medicare has paid less for the same health care than private insurers do, Medicaid has paid even less than Medicare, and uninsured “self-pays” pay the least.  Who makes up the difference?  We do, to the tune of over $1,000 per year in excess premium costs on our insurance.

Protecting Deadbeats?

Governing by sound bite may strike a chord in the short term, but the fact is that when the guy next store who can afford health insurance decides not to buy it, those of us who do have it are the ones paying to help cover him. 

Remember this when you hear people talking about getting rid of the mandate, or covering fewer people.  The bottom line is that they care more about the deadbeat than they do about you.  And to add insult to injury, the deadbeat probably doesn’t even vote, either.

So “it” isn’t as simple as Mr. Cantor’s chorus and Mr. Ryan’s refrain. 

We need more than this from our new Congressional leaders.  We need them to remember that health care policy in this country has evolved considerably over the last hundred years, that we provide and pay for health care in a uniquely American way, and that what’s best in our system – the quality of our care – has come about because of partnerships between the public and private sectors, and not in spite of them.  There’s plenty of room for improvement, but only if they make a real effort.      

 Will they be up to the task?

Six Reasons Why Health Reform Won't Be Repealed

Now that the election is over, those who voted for change because they wanted health reform repealed had better prepare for disappointment.  Here are six reasons why it’s not going to happen, no matter what campaigning politicians may have said.

First, no politician is going to vote to reopen the Medicare donut hole again.  The one millionth $250 rebate check was mailed out in August, and the 2 million plus who will eventually get them are not about to give them back. 

The donut hole will start closing in earnest in 2011, and the scores of people in every Congressional district who will benefit from lower out-of-pocket drug costs will remind members of Congress that they’re paying attention and they vote.  No newly elected member of Congress is going to risk offending these voters right from the start.

Second, people don’t want insurance companies to be able to deny them coverage all over again for their pre-existing conditions when it took so long to win this battle legislatively. 

A huge percentage of Americans now has at least one chronic condition.  The one in three who has hypertension, the one in ten who has diabetes, the one in ten who has cardiovascular disease, the one in seventeen who has a serious mental illness, and the one in thirty who has cancer simply don’t trust their insurance companies to insure them without a government mandate.  It matters to them that reform gave them the right to coverage, and they will not be happy if their newly-elected representatives take it away again.

Third, people don’t want insurance companies to be able to cancel their coverage when they get sick or reach annual or lifetime caps.  They hate it when insurance companies cancel their homeowners insurance after they file a couple of claims.  How do you think they feel when it’s their health and well-being at stake?  Does anyone really think politicians will wear pink and then vote against breast cancer patients?

Fourth, parents want their kids to be able to stay on their policies while they’re in their early and mid-20s.

Young people just starting out in entry level jobs with limited benefits can’t afford to buy health insurance on their own, and small employers also often can’t afford to provide it.  Allowing young adults to stay on parents’ policies benefits both young people and small businesses.  Politicians may be willing to risk a vote against one of these constituencies, but not both. 

Fifth, early retirees worry a lot about health insurance, and absent the opportunity to buy into Medicare love the provision that allows them to stay on their employers’ plans after they take their retirement.  The average retirement age in the United States is now 62, and many Americans have five to ten years between retirement and the start of their Medicare benefits. 

Think these people don’t need their health insurance?  Think again.  Almost 3,000 employers applied to the government to offer reimbursed coverage to retirees as of the beginning of October, including large and small private employers, state and local governments, educational institutions, and nonprofits.  Will members of Congress take on all these groups at once?

Sixth, people know premiums are already too high, and they’re not going to vote for someone who assures that they will go even higher.  Remember, the savings associated with health reform were front-loaded. 

Repealing popular provisions of health reform will load significant costs onto health care in the short term, while reaping few benefits.  Think it was tough running for re-election after voting for health reform in 2010? Imagine running for re-election in 2012 after taking away its benefits as health care costs and premiums rise out of control again for two more years.

People’s desire for decent, affordable health care didn’t disappear with this year’s elections.  In fact, it’s just the opposite.  If anything, they still think health care costs too much, and they expect more from their government, not less.  Public officials who don’t care won’t last long in public office. 

So what might happen, as public officials scramble to figure out what to do next while under pressure from the right and the left to fix reform?  I would guess that the so-called “individual mandate,” which assesses a higher income tax starting in 2014 on people who don’t buy insurance, will stand in as a surrogate for health reform, and some members of Congress will make a serious effort to target that one provision for repeal. 

Since this will affect no one between now and the 2012 election, it will be a safe debate for the new Congress to have, and give the appearance of doing something while accomplishing nothing and offending no one.  Winning or losing won’t really matter, so it’ll be a perfect issue for an otherwise deadlocked Congress.