If health reform is overturned

We know that much of the opposition to the Accountable Care Act is feeling pretty good right now, as they should after the Florida judge’s rejection of the Act.
What we don’t know is what will happen if they are successful in overturning health reform.
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 – their right, and I’d argue an obligation on the part of the for-profit health plans. As stock companies, their first obligation is to their owners – and that obligation requires them to generate profits and growth. That is not a value judgment – it is a statement of fact.
Health plans just don’t want the ‘risk’ that someone will have a claim. I’d expect healthplans 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.
The number of viable healthplans will continue to shrink. As a mature industry, the healthplan 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 healthplans 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 towards 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
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 $75k 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 is overturned, it is going to happen more and more often.
What does this mean for you?
Here’s hoping those seeking to overturn reform have a solution in mind that will actually work. And when you consider their ‘solutions’, remember that no insurer will cover your pre-existing condition unless they are forced to. Or your parents’ or your kids’ or your friends’.

Posted by on August 12, 2009 2:53 PM | Link to this post

8 thoughts on “If health reform is overturned

  1. Joe:
    One positive in all of this is that even if the Accountable Care Act is repealed or found to be unconstitutional, the groundwork has been layed for some type of future legislation. That legislation will find its core in the positive points of the ACA (there are a few of them), will be less controversial and may even be found to be constitutional!

  2. I am intrigued at the posting by Joe McLaughlin, who thinks that if the ACA is thrown out that a better bill will follow. I want to know what universe he lives in.

  3. Honestly, what planet does the GOP live on? Do they not know anyone with a preexisting condition? My juvenile diabetic son and college student, soon to graduate, will lose health insurance coverage this year if this bill is repealedl; I am a very distraught mother at this point just waiting to see how the GOP want to destroy my children’s health insurance coverage.

  4. Of course, it could go another way as well. From what I’ve seen, the biggest expense in health care comes from pharmaceuticals. So, it’s possible that there will be plans that cover them and plans that cover them if there’s a larger out of pocket expense from the subscriber, or plans that don’t cover them at all, but are affordable for companies to purchase.
    Frankly, though I’m not totally enamored with all that’s contained within the HC bill, I think it’s the way this country will eventually go, repeal or not (and I don’t think it’s getting repealed).

  5. Working for an insurance company, I see the value they bring, but do disagree with some of the industry practices that the ACA addresses. Having said that, I wish the debate about “insurance companies” could be less about attacking insurance companies, and rather focus on finding solutions that would improve the way “anti-selection” costs are handled (either by private enterprise or by the Feds). Listen, I hope we can agree that a pool of healthy, less risky people should translate into lower premiums. Is there a “fair” way to spread the “high risk” patients across the continuum of health plans? That’s what is most interesting to me and wish would be covered and debated more. It’s sort of like redistribution of the sickest. My hope would be the sickest people will still benefit from the “spread of risk” fundamentals of insurance coverage, while keeping costs low. Then, it would be up to the health plan that best manages their sickest members to survive in the private market. Would love to know if there is any research done on my idea. This idea kind of just popped in my head not too long ago after taking many AHIP courses.

  6. Why would a health insurance company not write any risk it can underwrite and charge a fair premium?
    Insurance companies have no problem writing business with known or potential claims. Look at self funding, we write pending transplants, people with rare expensive illness and anything else as long as it can be underwritten and charged a fair premium.
    Insurers want to avoid claims that they are forced to take by state underwriting laws.
    What do you mean claims start in the third year? Not in health insurance. If that was true then no one would write any business that has been around three years. Or is there some magical force that creates claims only after you have been with one carrier three years but if you change carriers it magically resets and you don’t have claims?
    In the states we operate carriers are aggresivly trying to hold on to any business no matter how long it has been on their books.
    “we already have a free market for commercial plans”
    What state is that? Every state I am aware of requires large captial reserves and approval by government which can turn you down for pretty much any reason they like, hardly a free market.
    In a free market a small town hospital could form a niche insurer to serve their community, in most states the required capital makes this impossible.
    “in most areas there are at most two plans to choose from.”
    There is no area in the US, except possibly HI, that only has two options. BUCA is licensed in all 50 states, Aetna recentlhy pulled out of a couple but that is 4 choice right there. Throw in Alden, B carriers, coventry and others and most places have at least 10.
    ” as the big plans get ever-better discounts from providers,”
    In many parts of the country providers are actually giving the small carriers better rates to foster competition with the large carriers. Hospitals are finally realizing having 70% of their revenue come from one source has serious downside.
    45 years of reform has done a great job controlling cost and expanding coverage.

  7. Why would a health insurance company not write any risk it can underwrite and charge a fair premium?
    Insurance companies have no problem writing business with known or potential claims. Look at self funding, we write pending transplants, people with rare expensive illness and anything else as long as it can be underwritten and charged a fair premium.
    Insurers want to avoid claims that they are forced to take by state underwriting laws.
    What do you mean claims start in the third year? Not in health insurance. If that was true then no one would write any business that has been around three years. Or is there some magical force that creates claims only after you have been with one carrier three years but if you change carriers it magically resets and you don’t have claims?
    In the states we operate carriers are aggresivly trying to hold on to any business no matter how long it has been on their books.
    “we already have a free market for commercial plans”
    What state is that? Every state I am aware of requires large captial reserves and approval by government which can turn you down for pretty much any reason they like, hardly a free market.
    In a free market a small town hospital could form a niche insurer to serve their community, in most states the required capital makes this impossible.
    “in most areas there are at most two plans to choose from.”
    There is no area in the US, except possibly HI, that only has two options. BUCA is licensed in all 50 states, Aetna recentlhy pulled out of a couple but that is 4 choice right there. Throw in Alden, B carriers, coventry and others and most places have at least 10.
    ” as the big plans get ever-better discounts from providers,”
    In many parts of the country providers are actually giving the small carriers better rates to foster competition with the large carriers. Hospitals are finally realizing having 70% of their revenue come from one source has serious downside.
    45 years of reform has done a great job controlling cost and expanding coverage.

  8. Nate.
    Insurance companies choose to NOT write policies all the time – it’s called underwriting. for example, I can’t get coverage for my eyes due to cataract surgery ten years ago. No carrier will cover my eyes – none. And the same is true for many other medical conditions in many other states. Your contention is absurd.
    Significant increases in claims tend to occur three years plus after initial coverage in the small and individual markets. That’s been known for the 25 years plus I’ve been in the business, which is why rates go up and the block gets churned then.
    You must operate in a state outside the US; look at any blues plan or regional or national player, all have significantly tightened underwriting and done so publicly.
    You confuse a ‘free market’ with anarchy. Of course states have capital requirements for insurers. That’s called ‘common sense.
    Read the latest AMA report on market consolidation. In most markets there are at most two viable health plan options. In many there is only one. Just because an insurer is licensed doesn’t mean it will – or can – sell you a plan with coverage.
    Re hospitals and other providers giving smaller carriers better rates to foster competition, again, you appear to be operating in a market or markets unknown in this country.
    And as for your last comment – that’s just ludicrous. If your point was factual, this conversation wouldn’t be happening.
    Joe