Wednesday, March 31, 2010

Why HCR Law Won't Make Anything Better

I have almost nothing to add to Dan Froomkin's reporting:

In the short run, companies are expected to keep doing what they've been doing, which means, among other things, jacking up their rates. "There's nothing to stop them from raising their premiums, and that's what they're going to do," said Angell, a supporter of "single-payer" health insurance.

. . .

"They also will continue to try to shift more and more of the cost of health care from them to the people that are enrolled in their plans," Potter said. That involves moving people currently in managed care, with its relatively modest co-pays, "out of those plans and into high-deductible plans that make people pay thousands of dollars before the company will pay a dime," Potter said. ... And for people who can't afford to pay the full deductible, that's a lot like not having insurance at all.

. . .

The new law requires companies to maintain a medical loss ratio of at least 80 to 85 percent.

But there are still ways to game even that limit. One is, paradoxically, to spend more on health care, either by offering more services or driving up costs. Insurance companies typically want to spend less on this stuff, but if the 80 percent slice gets bigger, so can the 20 percent slice. Another way, of course, is to label more and more company expenses as health care.

. . .

One provision she expects them to exploit is the one allowing companies to charge as much as 50 percent more for people who engage in unhealthy behaviors. "With anyone who's chronically ill, you can always find an unhealthy behavior," she said.

"So that's the new preexisting condition."

Angell also pointed out that there's been very little coverage of the fact that insurance companies will still be allowed to charge older people (over age 55) much more than younger people. Three times as much, to be precise.

As a result, people between ages 55 and 65 (when Medicare kicks in) who don't have enough income to pay high premiums will be left with two options: Not buying insurance and being hit with a fine; or paying premiums they can't afford.

. . .

"One thing in particular is they'll be trying to manipulate how regulations are written." The intent of the regulations is set forth in the law, but not spelled out; that job has been left to the Health and Human Services Department (HHS) and the National Association of Insurance Commissioners (NAIC), Potter said. "The industry will spend an enormous amount of money to try to influence how those regulations are written." . . . And each state legislature has to implement the regulations individually, including establishing their own regulations for the new health-insurance exchanges, where people not covered through their employers would be able to comparison shop for insurance at competitive rates.

. . .

"I think the worst-case scenario is they keep cheap customers in plans offered outside the exchanges, and leave the exchanges with high-cost customers, making it look like the exchanges are inefficient," Aaron said.

A lot of these dynamics would have been completely different if people had a so-called public option: A government-run insurance plan without the same toxic incentive structure. Then consumers would have had an alternative when private industry rates shoot up and services decline. But there is no such option in the new law.

Go read the whole thing, and understand why I feel that what passed in Congress has made nothing better- and some things worse.

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