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Making a Mess of Health Care Reform

Should Democrats manage to pass a health care reform bill, they will proclaim a great victory.

Whatever limited bragging rights they can claim will be due to the fact that eventually the plan will cover more, but not all, of the uninsured. That the extension of coverage will be phased in over several years, rather than immediate, is criminal. Many more people will suffer and die in the interim as a result of that compromise with so-called fiscal responsibility.

Certainly insurance coverage will be a great relief to those who have been waiting for access to the health system. It is the very least that should be done. Unfortunately, the least will be done in the least beneficial way possible.

For even as they are giving with one hand, the process of taking away with the other hand is already in progress. Even as many finally receive coverage, many more will find that the quality of their coverage continues to slip. The health care rationing of outright exclusion practiced now will be progressively subsumed by the more subtle rationing of cost, in the form of higher premiums or higher co-pays and deductibles. Up to now the practice of rationing has been more like an execution. Now you will get to pick your poison. Welcome to the brave new world of consumer driven health care.

With the reform proposals now seen as most likely to emerge from Congress, the immediate gains of expanded coverage are certain to be eroded quickly by spiraling costs. This will unfold in the following way.

The extension of coverage will take the form of a mandate for everyone to enroll in a health insurance plan. Almost everyone will have no choice but to enroll in plans that look pretty much like the plans that are offered today by the private, for –profit , insurance industry. The opportunity to enroll in a government sponsored “public option” plan that looks and operates like Medicare (at prices that mirror Medicare costs) will not practically be available to most people.

Those emerging proposals from which the public option has not been surgically removed with the blunt instrument of corporate influence, have eviscerated the public option. The government plan will not be able to use Medicare bargaining power and rates, but rather will have to go to providers and negotiate prices on its own. It won’t offer nearly as much of a discount to the private sector plans as it should and can be expected to offer a greatly reduced panel of providers to choose from. It initially was estimated that a robust Medicare-like plan might enroll as many as 120 million Americans. Now it is projected that perhaps it will enroll 10 million.

Because so few people are likely to join such a plan – by design – it will provide no brake on spiraling health care costs. The plans that most of us are enrolled in will continue to get more and more expensive with each passing year. The industry will continue to set the premium rates, of course. And in the next few years they will have the built-in excuse that they are being forced to cover all the people they have been rejecting for so many years.

As if they need an excuse. They will raise the rates just because they can. Blue Cross of California (now Anthem) raised my individual insurance policy rate 41 percent this year. I haven’t filed a claim in years. Their cost of providing insurance to people like me didn’t go up 41 percent this year. (Full disclosure: I have worked as a corporate health care consultant for 20 years.)

Expect the big rate increases to continue. With no controls and no competition from the public option, what incentive will insurance companies have to keep prices down. The higher the prices, the higher their profits, since it’s a given in our free market world that the right to as big a profit margin as you can get away with is sacred, even when the product is health care, where every additional dollar of profit can be measured in death and suffering.

With each new increase, more of us will be unable to afford the premiums. Yes the reform plan intends to provide subsidies to individuals to make insurance more affordable. But unless those subsidies include a health care inflation escalator provision, quickly the portion of the premium that individuals must pay will become unbearable.

And more of us will be buying our insurance in the individual marketplace. If the reform plan does not include a mandate that employers provide coverage, more of them will discontinue coverage and force their employees to buy it in the individual market. Even with an employer mandate, employers won’t be able to afford the rate increases either, and they will create fewer permanent positions that carry health benefits. For those employees who still have health coverage, expect to pay higher premium contributions and have higher co-pays and deductibles.

As the prices go up, insurance companies will create more inexpensive plans with fewer benefits, and many of us will have no choice but to opt for these plans, as cost increases will continue to rise much more quickly than wages. We’ll take our chances that we’ll stay healthy and we’ll choose to pay higher co-payments and deductibles when and if we have to actually use the health care system, rather than paying higher premiums up front for better coverage whether we use the coverage or not. Which means more and more of us will be paying for our routine visits, check-ups and preventive care, as well as more for any other services we need should be become ill.

In this way the insurance industry will realize its ultimate pipe dream, consumer driven health care for almost all of us. Consumer driven health care is based on the notion that when health care is too affordable, people run out and use too much of it. Make the prices higher and people will make better choices about using health care, the theory goes.

When we are all living in a high co-pay world, the industry will say this is a good thing. It’s helping to keep prices down. But the prices won’t stay down, because over-utilization of care as a result of patient decisions is a minor factor among the reason for spiraling costs. The vast majority of health care costs are incurred by those with major illness and chronic disease. Seriously ill patients will end up using expensive care eventually. And when they delay that care, it costs more. And that is exactly what happens when co-pays and deductibles are high for basic and preventive care. Studies conducted by major corporations have shown that high co-pays and other barriers to care cost employers more in the long run, because when faced with higher costs people too often don’t make better decisions. They tend to make worse ones. They tend to put off care they know they need because they are trying to save money. They put up with the nagging problem until it is so serious they can’t bear it any longer. Or they try to stretch their prescriptions by taking their pills less frequently than they the prescription calls for.

The best way to avoid this future is a single-payer universal health care plan, with private supplemental insurance for those who want to buy it. In other major industrialized nations, this kind of system delivers better health care for half what we pay now for health care in this nation.

If we can’t have single payer, we at least need to have the option to be able to buy a public option plan with negotiating muscle. The basis for premiums for this plan should be Medicare rates, except the new plan should have the power to negotiate better prices with the pharmaceutical companies (which Medicare currently cannot do).

Anything less than this might seem like some kind of victory to members of Congress, who already enjoy government health care and are not about to give it up as part of health care reform. But when the elected officials are whooping it up over their great accomplishments, the real party will be in the corporate suites of the insurance companies.

JEFF SHER lives in the Bay Area. He can be reached at: jeffsher@sbcglobal.net

 

 

 

 

 

 

 

 

 

 

More articles by:

Jeff Sher is a journalist specializing in the health care industry. He lives in San Francisco.

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