5 Freedoms You'd Lose in Health Care Reform

[GaryC 7]

5 Freedoms You'd Lose in Health Care Reform

by Shawn Tully

Monday, July 27, 2009

If you read the fine print in the Congressional plans, you'll find that a lot of cherished aspects of the current system would disappear.

In promoting his health-care agenda, President Obama has repeatedly reassured Americans that they can keep their existing health plans -- and that the benefits and access they prize will be enhanced through reform.

A close reading of the two main bills, one backed by Democrats in the House and the other issued by Sen. Edward Kennedy's Health committee, contradict the President's assurances. To be sure, it isn't easy to comb through their 2,000 pages of tortured legal language. But page by page, the bills reveal a web of restrictions, fines, and mandates that would radically change your health-care coverage.

If you prize choosing your own cardiologist or urologist under your company's Preferred Provider Organization plan (PPO), if your employer rewards your non-smoking, healthy lifestyle with reduced premiums, if you love the bargain Health Savings Account (HSA) that insures you just for the essentials, or if you simply take comfort in the freedom to spend your own money for a policy that covers the newest drugs and diagnostic tests -- you may be shocked to learn that you could lose all of those good things under the rules proposed in the two bills that herald a health-care revolution.

In short, the Obama platform would mandate extremely full, expensive, and highly subsidized coverage -- including a lot of benefits people would never pay for with their own money -- but deliver it through a highly restrictive, HMO-style plan that will determine what care and tests you can and can't have. It's a revolution, all right, but in the wrong direction.

Let's explore the five freedoms that Americans would lose under Obamacare:

1. Freedom to choose what's in your plan

The bills in both houses require that Americans purchase insurance through "qualified" plans offered by health-care "exchanges" that would be set up in each state. The rub is that the plans can't really compete based on what they offer. The reason: The federal government will impose a minimum list of benefits that each plan is required to offer.

Today, many states require these "standard benefits packages" -- and they're a major cause for the rise in health-care costs. Every group, from chiropractors to alcohol-abuse counselors, do lobbying to get included. Connecticut, for example, requires reimbursement for hair transplants, hearing aids, and in vitro fertilization.

The Senate bill would require coverage for prescription drugs, mental-health benefits, and substance-abuse services. It also requires policies to insure "children" until the age of 26. That's just the starting list. The bills would allow the Department of Health and Human Services to add to the list of required benefits, based on recommendations from a committee of experts. Americans, therefore, wouldn't even know what's in their plans and what they're required to pay for, directly or indirectly, until after the bills become law.

2. Freedom to be rewarded for healthy living, or pay your real costs

As with the previous example, the Obama plan enshrines into federal law one of the worst features of state legislation: community rating. Eleven states, ranging from New York to Oregon, have some form of community rating. In its purest form, community rating requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition.

Americans with pre-existing conditions need subsidies under any plan, but community rating is a dubious way to bring fairness to health care. The reason is twofold: First, it forces young people, who typically have lower incomes than older workers, to pay far more than their actual cost, and gives older workers, who can afford to pay more, a big discount. The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured.

Under the Senate plan, insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage. So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.

Second, the bills would ban insurers from charging differing premiums based on the health of their customers. Again, that's understandable for folks with diabetes or cancer. But the bills would bar rewarding people who pursue a healthy lifestyle of exercise or a cholesterol-conscious diet. That's hardly a formula for lower costs. It's as if car insurers had to charge the same rates to safe drivers as to chronic speeders with a history of accidents.

3. Freedom to choose high-deductible coverage

The bills threaten to eliminate the one part of the market truly driven by consumers spending their own money. That's what makes a market, and health care needs more of it, not less.

Hundreds of companies now offer Health Savings Accounts to about 5 million employees. Those workers deposit tax-free money in the accounts and get a matching contribution from their employer. They can use the funds to buy a high-deductible plan -- say for major medical costs over $12,000. Preventive care is reimbursed, but patients pay all other routine doctor visits and tests with their own money from the HSA account. As a result, HSA users are far more cost-conscious than customers who are reimbursed for the majority of their care.

The bills seriously endanger the trend toward consumer-driven care in general. By requiring minimum packages, they would prevent patients from choosing stripped-down plans that cover only major medical expenses. "The government could set extremely low deductibles that would eliminate HSAs," says John Goodman of the National Center for Policy Analysis, a free-market research group. "And they could do it after the bills are passed."

4. Freedom to keep your existing plan

This is the freedom that the President keeps emphasizing. Yet the bills appear to say otherwise. It's worth diving into the weeds -- the territory where most pundits and politicians don't seem to have ventured.

The legislation divides the insured into two main groups, and those two groups are treated differently with respect to their current plans. The first are employees covered by the Employee Retirement Security Act of 1974. ERISA regulates companies that are self-insured, meaning they pay claims out of their cash flow, and don't have real insurance. Those are the GEs and Time Warners and most other big companies.

The House bill states that employees covered by ERISA plans are "grandfathered." Under ERISA, the plans can do pretty much what they want -- they're exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states.

But read on.

The bill gives ERISA employers a five-year grace period when they can keep offering plans free from the restrictions of the "qualified" policies offered on the exchanges. But after five years, they would have to offer only approved plans, with the myriad rules we've already discussed. So for Americans in large corporations, "keeping your own plan" has a strict deadline. In five years, like it or not, you'll get dumped into the exchange. As we'll see, it could happen a lot earlier.

The outlook is worse for the second group. It encompasses employees who aren't under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only "qualified" plans to new customers, via the exchanges.

The employees who got their coverage before the law goes into effect can keep their plans, but once again, there's a catch. If the plan changes in any way -- by altering co-pays, deductibles, or even switching coverage for this or that drug -- the employee must drop out and shop through the exchange. Since these plans generally change their policies every year, it's likely that millions of employees will lose their plans in 12 months.

5. Freedom to choose your doctors

The Senate bill requires that Americans buying through the exchanges -- and as we've seen, that will soon be most Americans -- must get their care through something called "medical home." Medical home is similar to an HMO. You're assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.

Under the proposals, the gatekeepers would theoretically guide patients to tests and treatments that have proved most cost-effective. The danger is that doctors will be financially rewarded for denying care, as were HMO physicians more than a decade ago. It was consumer outrage over despotic gatekeepers that made the HMOs so unpopular, and killed what was billed as the solution to America's health-care cost explosion.

The bills do not specifically rule out fee-for-service plans as options to be offered through the exchanges. But remember, those plans -- if they exist -- would be barred from charging sick or elderly patients more than young and healthy ones. So patients would be inclined to game the system, staying in the HMO while they're healthy and switching to fee-for-service when they become seriously ill. "That would kill fee-for-service in a hurry," says Goodman.

In reality, the flexible, employer-based plans that now dominate the landscape, and that Americans so cherish, could disappear far faster than the 5 year "grace period" that's barely being discussed.

Companies would have the option of paying an 8% payroll tax into a fund that pays for coverage for Americans who aren't covered by their employers. It won't happen right away -- large companies must wait a couple of years before they opt out. But it will happen, since it's likely that the tax will rise a lot more slowly than corporate health-care costs, especially since they'll be lobbying Washington to keep the tax under control in the righteous name of job creation.

The best solution is to move to a let-freedom-ring regime of high deductibles, no community rating, no standard benefits, and cross-state shopping for bargains (another market-based reform that's strictly taboo in the bills). I'll propose my own solution in another piece soon on Fortune.com. For now, we suffer with a flawed health-care system, but we still have our Five Freedoms. Call them the Five Endangered Freedoms.

http://finance.yahoo.com/insurance/article...nsurance-health

[Mr. Big Dog 10,747]

They forgot at least these three:

6) Freedom to get ripped off

7) Freedom to be free of health insurance you paid for when you need it

8) Freedom to spend 1/3 or so of your health insurance premium for no benefit at all

[Lansbury 19]

9) Freedom to die of a curable illness because you couldn't afford to pay for treatment.

[GaryC 7]

Personally I am glad the dems are losing their nerve over this. I would rather see nothing done than the mess we would have if this junk passes. I like my insurance the way it is.

[Sofiyya 1,687]

9) Freedom to die of a curable illness because you couldn't afford to pay for treatment.

The health plan was being rushed by Obama because he didn't want anyone to know what's in it. What happened to Barry's promises for transparency and to post bills online for a time before they are voted on so the public can read and comment on them? Now that terms are being revealed, his numbers are dropping, and there is a growing lack of confidence in his agenda.

The plan, as it current stands, could indeed kill you if the panel they want to empower to decide whether you are worthy of costly care deems you unworthy, and allows you do die. You must have missed Obama in an interview say as much. This is a man who discouraged offering life-saving treatment for babies who survived abortion. The people in the executive branch who would be in charge of administering the plan are known to advocate allowing the elderly to suffer and die for lack of treatment.

Some of you are woefully unaware of what's in the plan, as are many of our legislators, who, btw, have exempted themselves from the health care plan so that they can keep their gold standard private policies paid for by taxpayers. In the meantime, they could at least do their job and know what they're voting on.

[Mr. Big Dog 10,747]

...

The American health care system is expensive, ineffective and socially inequitable -- and it comes at an annual per capita cost of $7,500 -- twice as high as in Germany. Since 2000, doctors, hospitals and the pharmaceutical industry have managed to achieve a 70-percent increase in earnings, which Obama calls "health inflation."

The health care industry already comprises a large and growing share of the American gross domestic product. That share is currently 16 percent, compared to only 10 percent in Germany. If nothing changes, it will increase to a monstrous 25 percent within the next 15 years.

The high costs of the system are not matched by comparable benefits and services. The government has no real control over the health care system and pharmaceutical executives, chief physicians and hospital managers set their own salaries. The health care market is like a game of football without a referee. And the American superpower ranks a shameful 37th in international studies of health care systems. According to one such study, about 100,000 people a year die in American hospitals as a result of infections, while another 98,000 die because of incorrect treatment.

America, as a Third World Country. Although the rate of return may not be as high as it is for Wall Street banks, where the US health care system does rank highly is in the profit margins of the medical-industrial complex. When advisors from the McKinsey management consultancy were hired to examine the system, they discovered $480 billion in profits that were not matched by performance.

"Pure Waste"

The renowned Institute of Medicine even estimates that almost one-third of all medical care in the US -- or about $700 billion worth -- is "pure waste."

...

Der Spiegel

[GaryC 7]

...

The American health care system is expensive, ineffective and socially inequitable -- and it comes at an annual per capita cost of $7,500 -- twice as high as in Germany. Since 2000, doctors, hospitals and the pharmaceutical industry have managed to achieve a 70-percent increase in earnings, which Obama calls "health inflation."

The health care industry already comprises a large and growing share of the American gross domestic product. That share is currently 16 percent, compared to only 10 percent in Germany. If nothing changes, it will increase to a monstrous 25 percent within the next 15 years.

The high costs of the system are not matched by comparable benefits and services. The government has no real control over the health care system and pharmaceutical executives, chief physicians and hospital managers set their own salaries. The health care market is like a game of football without a referee. And the American superpower ranks a shameful 37th in international studies of health care systems. According to one such study, about 100,000 people a year die in American hospitals as a result of infections, while another 98,000 die because of incorrect treatment.

America, as a Third World Country. Although the rate of return may not be as high as it is for Wall Street banks, where the US health care system does rank highly is in the profit margins of the medical-industrial complex. When advisors from the McKinsey management consultancy were hired to examine the system, they discovered $480 billion in profits that were not matched by performance.

"Pure Waste"

The renowned Institute of Medicine even estimates that almost one-third of all medical care in the US -- or about $700 billion worth -- is "pure waste."

...

Der Spiegel

And the health reform bill before congress will change all this.......how?

[rebeccajo 14]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

[GaryC 7]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

[Mr. Big Dog 10,747]

...

The American health care system is expensive, ineffective and socially inequitable -- and it comes at an annual per capita cost of $7,500 -- twice as high as in Germany. Since 2000, doctors, hospitals and the pharmaceutical industry have managed to achieve a 70-percent increase in earnings, which Obama calls "health inflation."

The health care industry already comprises a large and growing share of the American gross domestic product. That share is currently 16 percent, compared to only 10 percent in Germany. If nothing changes, it will increase to a monstrous 25 percent within the next 15 years.

The high costs of the system are not matched by comparable benefits and services. The government has no real control over the health care system and pharmaceutical executives, chief physicians and hospital managers set their own salaries. The health care market is like a game of football without a referee. And the American superpower ranks a shameful 37th in international studies of health care systems. According to one such study, about 100,000 people a year die in American hospitals as a result of infections, while another 98,000 die because of incorrect treatment.

America, as a Third World Country. Although the rate of return may not be as high as it is for Wall Street banks, where the US health care system does rank highly is in the profit margins of the medical-industrial complex. When advisors from the McKinsey management consultancy were hired to examine the system, they discovered $480 billion in profits that were not matched by performance.

"Pure Waste"

The renowned Institute of Medicine even estimates that almost one-third of all medical care in the US -- or about $700 billion worth -- is "pure waste."

...

Der Spiegel

And the health reform bill before congress will change all this.......how?

You're right, Gary. The bills currently making their way through the Congress don't effectively address these issues. Which is why I keep saying that - bill or no bill - the needed health care reform isn't happening. It's quite sad to see just how sold out Congress really is.

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

Apparently, sub standard health care is far more expensive than good health care. The numbers show that quite impressively.

[rebeccajo 14]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

You wouldn't mind having that bill hanging over your head?

[GaryC 7]

...

The American health care system is expensive, ineffective and socially inequitable -- and it comes at an annual per capita cost of $7,500 -- twice as high as in Germany. Since 2000, doctors, hospitals and the pharmaceutical industry have managed to achieve a 70-percent increase in earnings, which Obama calls "health inflation."

The health care industry already comprises a large and growing share of the American gross domestic product. That share is currently 16 percent, compared to only 10 percent in Germany. If nothing changes, it will increase to a monstrous 25 percent within the next 15 years.

The high costs of the system are not matched by comparable benefits and services. The government has no real control over the health care system and pharmaceutical executives, chief physicians and hospital managers set their own salaries. The health care market is like a game of football without a referee. And the American superpower ranks a shameful 37th in international studies of health care systems. According to one such study, about 100,000 people a year die in American hospitals as a result of infections, while another 98,000 die because of incorrect treatment.

America, as a Third World Country. Although the rate of return may not be as high as it is for Wall Street banks, where the US health care system does rank highly is in the profit margins of the medical-industrial complex. When advisors from the McKinsey management consultancy were hired to examine the system, they discovered $480 billion in profits that were not matched by performance.

"Pure Waste"

The renowned Institute of Medicine even estimates that almost one-third of all medical care in the US -- or about $700 billion worth -- is "pure waste."

...

Der Spiegel

And the health reform bill before congress will change all this.......how?

You're right, Gary. The bills currently making their way through the Congress don't effectively address these issues. Which is why I keep saying that - bill or no bill - the needed health care reform isn't happening. It's quite sad to see just how sold out Congress really is.

Let me make this clear, I am in favor of cutting out the waste. It would be great if we just had to insure ourselves for the actual cost of care rather than all the other junk that gets thrown in. Where we seem to diverge is who is to blame for all the waste. The insurance companies are being vilified and made the scape goat here and the government is trying to set itself up as the saviour. I think that is exactly backwards. The waste is caused by the government and the insurance companies are just passing on the extra costs. I want the government out of health care all together. No more regulations that add unneccisary layers of paperwork. Let the free market rule things.

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

You wouldn't mind having that bill hanging over your head?

You have no idea what I have been through. Lets just say that $19,000 is a mere pittance compaired to what my family had to endure. Just because someone has to pay for services rendered is no reason to ask the government to take the burden.

[one...two...tree 2,762]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

We have all kinds of different insurance to cover us from catastrophic costs that would otherwise bankrupt us and leave us in financial ruin. The point RJ is making is that health insurance premiums are unaffordable by many Americans who are only one health crisis away from financial ruin. The whole issue right now is that we need everyone in the pool and we'll all be better off for it. No one should ever have to be faced with an astronomical medical bill that will ruin them financially. You couldn't afford that to happen to you and most Americans cannot.

Edited July 29, 2009 by Col. 'Bat' Guano

[GaryC 7]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

We have all kinds of different insurance to cover us from catastrophic costs that would otherwise bankrupt us and leave us in financial ruin. The point RJ is making is that health insurance premiums are unaffordable by many Americans who are only one health crisis away from financial ruin. The whole issue right now is that we need everyone in the pool and we'll all be better off for it. No one should ever have to be faced with an astronomical medical bill that will ruin them financially. You couldn't afford that to happen to you and most Americans cannot.

Life is full of risks. Our health is just one of many. I don't think that any of them should be handed over to the government.

[Mr. Big Dog 10,747]

Anybody out there got a $19,000.00 hospital bill you are trying to pay off?

After it was reduced (as 'charity') by 25% of the original cost?

What is your point? Good health care is expensive.

You wouldn't mind having that bill hanging over your head?

The really sad part is that if you had insurance - even a high deductible plan - this bill would be around 5K. I've seen it when a friend of mine underwent surgery - the original charges from the hospital were around 17-18K. After the negotiated discounts from the insurance were applied, this bill was down to just about 4K of which my friend was liable for 10%. Same for the birth of our daughter. The original hospital charges totaled well over 30K for the c-section delivery and three day hospital stay - the insurance rates for those services, however, came to a mere 7K or so. As well, wifey went to a dermatologist just the other week - $255.00 before insurance discounts - not quite $100.00 after.

Bottom line, you're royally fcuked if you don't have an insurance plan that - if nothing else - provides you with negotiated discounts. Talk about adding insult to injury.