HEALTH PLANS/POLICY: Individual health insurance — going cheap!

Two people have mentioned this report from eHealthinsurance.com, so I thought I’d better address it. The first is from "friend of THCB" Brian Klepper at the Center for Practical Health Reform. He writes:

Here’s a report, issued a couple days ago, that is a striking example of the power of transparency information, applied to current individual health insurance pricing. eHealthInsurance.com ran a study to determine the lowest quotes available to non-smoking 30 year olds who purchased a $1,000 max deductible, 20% co-insurance, $3,286 out-of-pocket max plan.

They did this around the country, and then selected the lowest premium available for this profile in each location. Long Beach, CA had the lowest monthly premiums, coming in at $54. The lowest 10 cities – 7 are in California, 2 are in Arizona and 1 is in Ohio – all come in at less than $59. Pricing goes up from there: My hometown of Jacksonville, FL is 29th at $89.03. Las Vegas is 34th at 113.38. Dallas, Miami, Boston and NYC are 47-50, at $146.42, $151.20, $267.57, and $334.09 respectively. (The authors note that Boston and New York are subject to state-mandated guarantee issue and community rating). Still, the Long Beach premium is 61% of Jacksonville’s, 37% of Dallas’, 36% of Miami’s, 20% of Boston’s and 16% of NYC’s.

It is difficult to believe that even the combined differences in care and regulatory costs can account for such huge disparities. This type of information is a starting point for inquiry and action by industry leaders, regulators, and legislators. Congratulations to eHealthInsurance for publishing this revealing look at the industry.

The other post about the study is from a new heath care blogger (but a regular blogger on other subjects), Elisa Camahort, how is getting sponsored to blog about health care from the consumer’s view point, by eHealthinsurance.com. The blog is called Healthyconcerns and  has some discussion of the same study.  Elisa figured out that she could have saved a little if she’d used her sponsor’s service.

Interestingly Elisa’s Pilates teacher who was unable to get coverage because of a pre-existing condition, managed to sneak in the backdoor into insurance coverage by using short term coverage….that’s not a real solution. First it deliberately excludes people with virtually any major disease, then it runs out after a year or six months and can’t be renewed with that company.  You can usually renew it with another company, but over time you’ll run out of insurers.  Finally, you’ll want to get onto more stable long term insurance. 

I tired to do that via eHealthinsurance and my $70 quote became a $400 quote for the same coverage once they found that I’d had a prior knee surgery. So then I retreated to yet another short term insurance plan.  I presume that I could have kept playing that game for a while, but in the end I opted for a $200 a month premium for the same coverage via a small business coalition in California called PacAdvantage.  It’s not exactly a great rate, as everyone who can do better in the individual market is already in it, leaving a bunch of sickies in the pool, but I kid myself it’s better than the uncertainty of a short term policy.  And of course if the short-term guys figure out that sick people are using them to get access to insurance, they’ll extend those "excluded" groups to include more categories of potentially sick people.

Brian is right, though.  It’s good to have some transparency in pricing (although attempts to do that at the provider level are failing).  But the issue remains that in insurance we’re not really discussing apples to apples. And if you look at real health care premiums in different places, including underwriting averages et al, then they don’t match the vast discrepancies seen in this study — even though they are vastly different because of the difference in underlying health care costs, which are explained by Wennberg, not eHealthinsurance.

And  the idea behind these cheap health insurance products, promoted first by Blue Cross in California in the late 1990s, is theoretically to get more uninsured people into insurance.  But of course while we want to get them into the risk pool, these products are not going to remain viable if they let sick people buy them.  So that’s why they’re underwritten to death and why they’re not a solution to uninsurance. And of course you only really need health insurance if you’re sick. It’s the same old story of the bank only lending you the money if you can afford to pay them back — and then why would you want to borrow the money.

….and don’t start me on the impact of high deductible health plans on the community risk pool.

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  1. I was just turned down for a PPO from Healthnet because I could not show a year of controlled high blood pressure records from my doctor. My doctor’s records were seized and I have been going to various clinics to obtain my Tenormin. My blood pressure is a little on the higher end when I go to these clinics so it looks like I am a bad reisk.
    I have proof of 10+ years of taking the same medicine for blood pressure control, so wouldn’t that seem to be worth something?
    I do not know where to turn for reasonable health coverage (the plan I applied for was to be $139 mo. w/a $4,000 deductible).
    Any suggestions for a company that qualify me without a lot of hassle?

  2. Sue –
    The health plan you have may be quite different from what is promoted on the AARP site. The plan there is a United Healthcare plan and is not a true group plan. The benefits are modest and rates are middle of the road, depending on which risk class is assigned. Underwriting is apparently modified but I am unable to get full details on their criteria.
    It appears the plan is HIPAA compliant and as such they are in a position to accept someone with creditable coverage and waive the pre-ex. They have 3 rating levels and your health history will determine which category fits your situation. They also have a 5 year look-back on health history.
    There is nothing in the online information to indicate they will guarantee to issue coverage (which is indicative of a true group plan).
    That being said, I am not familiar with TX laws as they apply to insurance products so this plan may indeed have a guaranteed issue provision.
    This particular plan is an individual plan issued through a trust.

  3. Bob,
    I appreciate your comments but do question them. First, the initial agent I used actually specialized in health insurance. I was a corporate officer of a $200 million publicly-traded electronics manufacturer and his firm was handling our group health insurance. He had sold me additional life insurance because his firm also handled life. When I decided to start my own small business I went back to his firm as a starting point in exploring health insurance options. We looked at several plans and selected the individual plan he felt was most responsive. Based their underwriting practices, I elected to stay with COBRA.
    My current insurance plan’s certificate of coverage carries a Group Policy number. My previous insurance coverage was also a group plan and when the current insurer reviewed my prior coverage they indicated that pre-existing exclusions would be waived because I had prior credible coverage. If these were really “individual” plans, why would they be acknowledging practices only required in “group” plans (i.e. HIPAA guaranteed portability provisions)? Both plans do indicate they may invoke pre-existing conditions–the statements made in my case were that because of my prior credible coverage they were not doing so.
    I don’t disagree that most association plans are individual insurance. I’ve actually made a point of questioning that issue as I’ve shopped and virtually everything else I’ve looked at is individual and seems very flaky–so your comments there are correct. I’m actually opposed to the effort to broaden association plan growth through elimination of current insurance regulation because I’m concerned the end result would be more very flaky plans collecting ever-increasing premiums and paying virtually no claims vs. access to good coverage. I actually understand the concept of risk pools and the cost issues. But I also have a problem understanding how the premium cost on high deductible policies can nearly double in less than two years. When I joined that plan my premium was $200 less than the Texas high risk pool which back then was about $500/month. By last month, it was equal to the premium in the Texas high risk pool, now $700/month–so the cost acceleration was “beating” cost increases faced by a pool of uninsurable cancer survivors and diabetics. Keep in my the lowest deductible in my prior plan was $3K. The high risk pool has a $250 deductible which means they are paying a lot more in claims as well as only insuring folks this plan would likely exclude. My $700/month premium would have had a $5K deductible, which means most of the insured probably aren’t making claims–sick folks don’t like high deductible policies. I recognize that “pool mathematics” were at work at some level, but this also feels like “churning” practices–which while illegal in life insurance, aren’t illegal in health insurance and have been documented in a study elsewhere in Matthew’s blog. The end result of my insurance experiences over the last four years is an increasing interest in better understanding single-payer or more heavily (yet consistently) regulated health care insurance options. I don’t see how the current industry practices are sustainable and I’m afraid that the mechanism for change will be some kind of massive collapse which results in a taxpayer bailout of health care providers or bankrupt uninsured consumers. I understand why small pools don’t work. And, I also understand that in a market where consumers have virtually no influence and little ability to really understand cost choices in medical services that there isn’t going to be pricing “correction” influence without legislative intervention. I honestly believe the current insurance and health care provider mentality is: “let’s see how long we can ride this gravy train” and there is a fair amount of lobbying going on to make the trip last a long time. I don’t want an insurance plan that pays all my health expenses–I just want fair and consistent premiums and coverage that can kick in if I have a significant health expense. Right now I appear to have that with the current plan. How long it was last, is anyone’s guess. I also don’t disagree with your statement that this premium will also rise, but I don’t see how switching to an individual insurance plan would do anything to change that (other than eliminate my HIPAA portability protections which would make it impossible to not have to deal with pre-existing condition exclusions every time I switched). I don’t think individual insurance or all agents are bad or greedy–the current market and legislative environment allows these conditions to exist and all agents/insurers are just operating within the parameters of that market–some more abusively than others. But, I do believe that in order to create an environment which provides sustainable, affordable health care options to the majority of our population, the current market will have to change and I think that end result will reflect higher out-of-pocket expenses for most consumers (and preferably improved focus on health to lower those expenses) and lower margins for providers and insurers (and hopefully some increased operational efficiency once the lower margin factor kicks in).

  4. Sue –
    The AARP plan is not a true group plan but an association endorsed individual health plan. That’s not necessarily a bad thing, just different from true group.
    AARP as a general rule does endorse some decent plans but you can usually do better elsewhere.
    A life insurance agent who “dabbles” in health insurance is almost as dangerous as one who is brand new in the business. Life underwriting is as different from health underwriting as night & day.
    As an example, you can live with diabetes for a very long time if you take care of yourself. Some diabetics live to a ripe old age.
    Conversely, diabetics, even those who monitor their A1C regularly can still develop a host of medical problems, some of which are very expensive to treat.
    So a life carrier may issue a policy that is standard while most health carriers will reject that same individual.
    Back to your situation . . .
    I can’t say that I could have done a better job, and I am not soliciting your business. Wouldn’t do any good even if I were since we are in different states.
    What I can say is this. Insureds (including my own clients) complain about rate increases all the time. The usual take is like yours, they never had any claims yet their premium increased. Health insurance will increase whether you had no claims or $100,000+ in claims. And the increase will be the same whether you had no claims or lots of claims.
    That’s just the way it works. I could give you a detailed answer but no one really cares and I don’t have the time to explain the way risk pools work.
    The situation you describe where an ER (exclusion rider) is used AND the premium is surcharged is relatively new. Here in GA only one carrier does that and believe it or not there is justification. Basically someone who has one health problem, particularly if it is systemic, will eventually have other health problems. So even if the carrier excludes one body part you can still generate higher claims than one who is completely healthy.
    I don’t know that this practice will become widespread but it may.
    The AARP plan is not necessarily better than what is available to the public and will eventually deteriorate. At some point the carrier will get off the risk and a new one will rotate through. That’s just the nature of association plans.
    The biggest drawback I see to buying from AARP is this particular policy is only issued to those who are age 45 and up. Without younger, healthier people in the pool the rates have nowhere to go but up and do so at a higher than normal clip.
    The “consumer friendly” policy is one that most likely is weak in benefits. I have not seen the particular policy you have but I do know from reviewing other AARP plans they put a lot of lipstick on the pig to make the plans seem attractive.
    All of the talk about AHP’s & CHP’s sounds good to those who don’t understand the dynamics of health insurance. Fact is until a dozen years ago or so most association plans WERE true group plans, not invidual coverage as you find now. The covered members were in a pool that was statewide or in some cases covered several states.
    I know this because several years ago much of my business was state & regional association health plans. Eventually they all went away never to return. In some cases states legislated the pool out of existence while others simply imploded.
    One final comment on your situation. Consumer friendly on the front end usually means you will have issues getting your claim paid on the back end. Just keep that in mind. Might be a good idea to find out what will and will not be paid before a claim is incurred.
    take care,

  5. Bob,
    I ended up with AARP and United Healthcare. It’s a fair policy and appears to be Group. AARP is one association that takes care of its own. I agree there are a lot of really questionable ones out there. I just got out of one that was ugly. Unfortunately, my original insurance agent was very little help. He had done my life insurance underwriting a few years before and really thought I be a breeze to insure–the life insurance policy had included a full physical/blood panel etc. that placed me in their lowest risk category. His individual health insurance provider option recommendation was the one that excluded my entire GI tract. After that he didn’t have a lot of options and the association group plans were the best option outside of our state’s high risk pool because I had continued my COBRA coverage and maintained HIPAA mandated portability. When my first plan spiraled its rates over the high risk pool rate in spite of a $5K deductible I started shopping again–over a two year period rates jumped from about $1200/qtr. to $2100/qtr and the only reason they stayed that low was that I upped my deductible from $3K to $5K. I’d love to see the math that justifies that cost increase. So far, the AARP option looks very good. Sign-up and billing practices were more reasonable than any of the individual policies I looked at. It took me two months to get a refund on the bait-and-switch premium I gave my insurance agent for individual policy that excluded my GI tract and then also increased the base rate. Got to love that–a broad exclusion that eliminates any possibility of paying a claim and an upgraded premium–then a song and dance about the time needed to refund the money. AARP doesn’t bill until they approve you and let you know rates. On top of that they bill monthly instead of quarterly. Of course, one could make the observation that AARP’s large pool and internal consumer-friendly policies have a level of influence not found in the insurance industry at large. Which makes me wonder about the potential benefit of mandated larger pools and consistent state-to-state legislation.

  6. //Note to gadfly. Those who consider others to be untruthful probably feel that way because they themselves are not to be trusted.//
    Old wives’ tale, debunked by the Scientific American article.
    According to the article, the best liars have a strong capacity for self-deception. This has nothing to do with their ability to evaluate whether others are telling the truth or not. In terms of evaluating, the article seems to suggest that most people share the same flaw (whether they themselves have the “capacity for self-deception” or not): they associate confidence with honesty and vacillation or uncertainty with dishonesty. I think this is interesting because it makes poor judgment a universal quality and suggests that people are ostracized for their low capacity for self-deception – i.e., society actively weeds out what anyone would regard as a desirable character trait in the abstract.
    I’m still trying to decide what I think of this guys’s thesis, but I do tend to believe his academic research over a hoary platitude.

  7. //I can tell you a consumer who is trying to find coverage, and get their claims paid without the assistance of a professional agent is probably throwing their money (and time) away.//
    Now even more depressed about humanity. 🙁

  8. Sue –
    My apology for lumping your condition in with your neighbor. I should have made the distinction clear in my post.
    Your mention of “association-provided group insurers” gives me pause. Most association coverage is not true group insurance but rather individual policies that have been sanctioned by the association. As such, it is unlikely you have the protection associated with a true group plan.
    One marketer in particular takes great liberty in describing their coverage for the self employed. They talk about protecting their clients against being singled out for rate increase or cancellation. Fact is, most states prohibit ANY carrier from singling out someone for cancellation or rate increases. This marketer to the self employed offer a policy that is not a major medical plan, but a hospital-surgical plan with a bunch of riders. The difference is dramatic when you try to get your claim paid.
    I am not saying your coverage is like this, just that some plans are not what they appear to be.
    As for your particular situation, I can only speculate. Some carriers will permanently exclude coverage for treatment related to a hiatal hernia, others will cover you but will surcharge to extend coverage, some will exclude coverage for up to 3 years.
    This variance in underwriting is why most people are just wasting time shopping for coverage. This also makes my point . . . if you want your claim paid you need to know which carrier to use, which to avoid. The only way you will know this is to work with a knowledgable agent, preferably one who has been in the business at least 5 years and represents more than one carrier.
    In the 30 years I have been in this business there has been a lot of change, not all of it for the good. I can tell you a consumer who is trying to find coverage, and get their claims paid without the assistance of a professional agent is probably throwing their money (and time) away.
    As stated before, I know how to get claims paid. Perhaps that is why my clients are loyal.
    Note to gadfly. Those who consider others to be untruthful probably feel that way because they themselves are not to be trusted.

  9. Bob,
    First don’t confuse me with my neighbor. She’s the one with the kid with asthma and the flaky agent. She was touting that policy when I was shopping health insurance last month, and the reason I went with a different option was exactly in line with what you’ve said. I can’t believe that her claims will get paid and my guess is that her agent’s practices will result in a greater number of his insured’s claims being questioned.
    I’m the person who is getting hit with a 25% premium increase because I’ve disclosed a heretitary hiatal hernia. Because I’ve stayed with association-provided group insurers I haven’t gotten hit with pre-ex condition exclusions. The one individual carrier I looked at wanted to exclude my entire GI tract so I’ve been less than excited about going back down that road. Everyone in my family has a hiatal hernia and it isn’t costing any of us anything in terms of medical care typically. My grandfather had surgery on his in the 1960s, but most of the current generation of my family is taking no medications or receiving treatment associated with that condition. I made the mistake of verifying I had in an exam a few years ago and now I have to disclose it on the questionnaire. I haven’t been hospitalized since I was 13 and was thrown by horse. Even when I had a low deductible I never made the deductible because I don’t do more than routine exams at doctors. I can’t tell you how much it galls me to pay (with my previous insurer thousands and with my current insurer hundreds) of extra dollars for a condition that is getting me “rated” without actual costing anything–I’ve typically been one of the lowest users of health care services in any pool I’ve been in. At least the current insurance company had the underwriter call and ask questions–although one of those questions was whether or not the hernia had developed as the result of an eating disorder–so I’m starting to understand what is driving the score–the answer is no it is genetic. The point of my earlier posts was that I think our system does over-rate risk factors and unfairly charge those of us who are honest. As long as that condition exists you are going to see people lying on applications to get better rates. I hate to say it, but the folks I see who have lied don’t seem to be hurt by it. It’s not right, but it is happening. If you had a system that “re-rated” individuals up or down after the first year based on actual treatment records it would be a lot fairer. I recognize it could still be “played” and it would penalize healthy folks who had a bad year, but it would be better than the current system which penalizes those folks if they are honest for the rest of their lives. As a consumer I think the insurance market is getting out of control.

  10. //been truthful and paid through the nose for it//
    Exactly. So have I in many ways. I find this so depressing.
    What I found interesting about the Scientific American article is that it pointed out that ironically more truthful people are perceived as less truthful because they get jittery if their conscience tells them they are approaching a lie. What this means is that because they are unsuccessful, the more truthful people are stigmatized as having something “wrong” with them. I actually wrote the author of the article about this. I hope he explores that particular aspect further.
    The insurance dilemma is a great example.

  11. Sue –
    Getting a “great” rate and nominal underwriting intrusion is fairly easy. Getting your claims paid is another issue entirely.
    If you want a plan that is perceived to be a “deal”, then lie.
    If you want you claims paid then you better come clean.
    My clients get their claims paid and they like it that way. As for those agents who encourage lying on the application to make the sale, well nothing more needs to be said about their character.
    Each carrier words their application in such a way as to dovetail into the policy that will eventually be issued. Some carriers are more stringent on things like asthma than others. You would be better off with a carrier that considers asthma a non-issue than to lie on the application. Sounds to me like your agent is just taking the lazy way out . . . and their are a lot who do that. Getting a commission was more important than providing their client with a policy that would actually pay their claim.
    You don’t have to like the rules the carriers set forth to qualify for their coverage. But if you want full coverage you need to play the game according properly.
    Most illness related claims on individual policies will routinely be denied during the first 12 months the policy is in effect. The reason?
    Carriers know that insured’s lie on the application and will deny an illness related claim as pre-ex. Those that appeal the denial and can prove there is no pre-ex condition will get their claim paid. Those who fail to appeal, or cannot prove the condition is not pre-ex will end up paying the claim out of their own pocket.
    Every one of my clients have their claims paid in full according to the terms of the contract. The only reason that happens is because I tell them how to work within the system to maximize their coverage.

  12. //My clients know if they lie on the application chances are pretty good they will be found out and the outcome will not be pretty.//
    Interestingly enough my neighbor’s insurance agent was the one who suggested that she could fail to indicate her child’s asthma because she wasn’t regularly needing an inhaler.
    My insurance agents have typically taken your approach which is to recommend full disclosure. The end result for me has been higher premiums and aggressive underwriting, even though my hiatal hernia requires no treatment. The folks I see who are less truthful are getting great rates and if their conditions are not driving claims they will probably get away with it. The unfortunate fact of the current questionnaires, is that answered truthfully they can drive risk classifications that don’t play out in terms of claims incidence. I’ve been truthful and paid through the nose for it and my insurers are benefiting all the way to the bank because I don’t cost more. Unfortunately, I don’t get to drag my insurance company before a court to get back my higher premiums when their underwriting practices rate me higher than my claims incidence indicates. With a little more sanity in the process, both consumers and insurers could have better outcomes long-term.

  13. //My clients know if they lie on the application chances are pretty good they will be found out and the outcome will not be pretty.//
    I would be surprised if someone desperate for health care thought in those terms. I’m sure people who sell policies are obliged to make stern warnings about the consequences of getting caught. I have never been involved in buying private insurance myself, but I’ve listened to plenty of people talk about how they are going to deal with their need for insurance when they have a chronic condition. I’d also like to point out that insurance salesmen are widely perceived as scammers. My senile grandmother paid an insurance salesman who came every month in *cash* for years: my mother was never even able to find the policy.
    For the liars being more successful, I refer you to this article:
    I’d like to point out that the Court System currently rewards lying because lawyers are expected to construct a biased story and the penalties and perjury is tolerated. People who try to tell the whole story, accomodating for the other side’s point of view, just provide material to be exploited by the other side.

  14. Gadfly –
    Avoiding the truth may be a national pastime for some, but that doesn’t make it right. Carriers take misinformation quite seriously. Lying to a carrier is fraud and considered a felony. In addition to having your claim denied and/or coverage cancelled, you could find yourself before a judge.
    Admittedly most situations do not lead to criminal prosecution unless the falsehood is blatant.
    My clients know if they lie on the application chances are pretty good they will be found out and the outcome will not be pretty. Carriers have up to 2 years to discover fraud and rescind the policy. That gives them a lot of time to fully investigate and take action.
    BTW . . . one writes a resume’ and liars are not always the most successful people in life.

  15. It is time to stop giving lip service to prevention. I have been a nurse practitioner for nearly 30 years and I can say that the “health care industry” does not care about keeping people healthy. I have been hearing about “prevention” for three decades but have seen little action – even though the research is in that says prevention is indeed the best medicine. We are under utilizing nurses as primary prevention clinicians. The only time prevention gets the health care industry attention is after someone contracts a chronic disease such as diabetes or cardiac disease. Then it becomes important to prevent the long term sequelae of such disease to save MONEY. What we need is primary prevention

  16. //It WILL come back to bite you.//
    I’d like to think that about the way people right resumes, too, but it’s kind of hard to miss the fact most people lie and don’t get caught. And the liars are more successful in life. 🙁

  17. Random thoughts . . .
    Not sure much can really be gleaned from the eHealthinsurance survey. Just a wag, but my guess is the plans are quite dissimilar in benefits. Plus CA residents have a greater proclivity for choosing HMO’s which are typically lower in cost compared to PPO’s.
    About the only thing one can say with some certainty about finding low rate plans is this. Lower rates = lesser coverage.
    The surcharge from $70 to $400 for a health plan is a bit unusual. Most carriers will allow rates to double from standard rates before they decline. I would expect that the increased premium meant you had coverage for the pre-ex condition.
    Not all STM’s are created equal. Yes, they do have more liberal underwriting but they also have a tough pre-ex. Basically anything you have been treated for in the previous 5 years is excluded. When your 6 month period expires, you don’t renew, you make a new application. That starts a new pre-ex and new accumulation period. Some carriers will not issue a new policy if you have had any claims in the prior period. Not all STM’s limit you to 12 months. At least one carrier allows unlimited re-application. And yes, an STM is not a substitute for a traditional major med.
    Some carriers that dominate the market need new bodies in their pool to stay competitive. They utilize a cycle of low rates first year then hammer on renewal. Carriers like to purge their block every 3 – 5 years to stay profitable. The longer a policy stays on the books the less profitable it is. One way to compensate for policyholders who are long in the tooth is to artificially stimulate new sales with bargain pricing and liberal underwriting. Along with the liberal underwriting comes a stringent pre-ex that allows the carrier to exclude many illness related claims in the first 12 contract months.
    HDHP’s such as those that qualify for the HSA are something everyone should consider. They are less expensive for the carrier to administer for many reasons. Price breaks are available although some carriers have yet to really get a handle on how to price these plans. The lowest deductible most should consider is $2500 and many would be wise to look at $5,000 and higher.
    Fudging on an application is a good way to get a future claim denied or even worse, get your coverage rescinded back to the effective date. Just because something is intentionally omitted on an application doesn’t mean you won’t get caught. It WILL come back to bite you.

  18. //Ultimately, they will prepare our younger generations //
    A healthy young person will probably put their discretionary income somewhere besides HSAs. If they put it in a Roth IRA for instance, they have the flexibility of accessing all their contributions before age 59 1/2.

  19. I don’t disagree with the idea of HSAs being a good transition vehicle to consumer-driven healthcare. To me they are a pre-emptive strike similar to what 401Ks have represented in the changing retirement option coverage landscape. Ultimately, they will prepare our younger generations for more responsibility in health care cost assumption. But the real challenge I see is protecting consumers who aren’t easy to insure and won’t have 20 or 30 years to build up an HSA. Imagine if every 64 year old with a retirement plan got a letter in 1986 saying “welcome to our 401K–your retirement coverage is no longer available–but we’ll match your contributions 25% to help you build a secure future.” I’m insurable today because I’ve never dropped group coverage and have HIPAA protections against pre-existing condition exclusions. My hiatal hernia increases my group rate to the second category (even though it incurs no cost) but in individual insurance underwriting it has driven one company to completely exlude my entire gastro-intestinal system. That kind of aggressive underwriting policy combined with elimination of corporate tax breaks could create a situation where millions of middle-aged consumers were dumped into a market with few affordable options. Keep in mind that many of us middle-aged consumers have contributed to insurance premiums either by paying premiums directly or through accepting the cost of health insurance as a component of total compensation for our entire lives. In short, we’ve paid dues into a system that is going away. Businesses are already reeling with health care costs–eliminate the tax deduction and those benefits will disappear and if those covered employees had to go into today’s underwriting market many won’t be insured or would find no affordable policies, not because they have costly health issues but because their questionnaire answers put them into less attractive groups based in insurance company profiles. To me, the real question is how can the 40+ market be adequately insured until Medicare age if we eliminate our employer-based safety net?

  20. Sue- I think you are thinking about this absolutely right…
    The tax credit needs to be large enough to cover a “reasonable plan”– which could be a HSA + a reasonable amount of the deductible. Remember that if all American citizens received this– we would have most of the children of today be holders of HSAs with real balances as adults. The up front cost will be high– in part offset by the additional tax receipts (remember the $190 billion tax exclusion for healthcare to business). But all sides of the political spectrum believe that the current system is heading US (upper and lowercase) to bankruptcy.
    What to do with the really sick (not just mild asthma or previous knee arthroscopy)? The sickest should be in a collective pool– their tax credits fund a portion. A portion can be “reinsured” privately. Taxpayers on the state and federal level, plus charity, plus patient resources will cover the rest. In exchange for this benefit (note I am not saying entitlement)– those patients must participate in their care — smoking cessation, weight loss, appropriate preventative care.
    Physicians must also be held accountable for taking appropriate steps for care. More on that later if there is interest.

  21. Going back to the cheap plan concept, the other issue I wonder about is the actual underwriting process. Both my neighbor and my brother in California have recently signed up for these plans. My mother keeps telling me I don’t know how to shop because my brother has gotten such good insurance rates. My brother’s wife is a chain smoker who has had a miscarriage in the last year. I’m guessing those conditions weren’t mentioned in her application, but don’t know for sure. My neighbor has a child with asthma but didn’t list that on the application because she doesn’t “regularly” need an inhaler. While the applications all list a note that failure to disclose creates the potential liability for repaying all services provided through the plan, I think a lot of people are hedging on their applications. It will be interesting to see what happens over the next few years if people who fail to disclose conditions in order to get best rates seek treatment and that subsequent treatment reveals chronic conditions that should have been disclosed. Because ultimately the pools supposedly underwriting only the healthy may be getting the chronically ill or those with unhealthy lifestyles who have successfully hidden their conditions during the application process. This is just one more way our current system unfairly shifts costs to certain segments of the population (i.e. “rated” individuals) and illustrates the fallacy of the benefits of the “free” market. The more we cost shift, the more we are creating a situation where costs incurred are not offset by premiums and co-pays.

  22. //consumers wisely accessing health//
    I’m wondering about the concept of the “regular check up”. If I were making choices about wisely accessing (expensive) health care, I wouldn’t have regular check ups. I would only go to the doctor when I had egregious symptoms, and by then it could be too late.
    This is a speculative question, because I personally would only go to the doctor if I have symptoms of something, anyway. When I have insurance, I usually don’t have time for extra doctor’s appointments. However, when I do go to the doctor, I usually get a “wait and see and come back in six months (when you don’t have insurance)” response. I also get health maintenance advice like “eat right, exercise, lose weight” – which is frankly a waste of the 15 or so minutes the doctor will give you these days.
    My thoughts:
    1) Preventative care, health maintenance, etc. does not belong in the doctor’s office. This is just padding their revenue, and it raises the cost for everyone. Community health education should be handled in other ways. I’d suggest more support for community gyms with health education classes there.
    2) If a patient comes to see them for a symptoms of a problem, the doctor should address that problem immediately instead of shoving it of down the road sex months to create more appointments. Patients should fill in a form before they see the doctor to make sure their symptoms get onto the charts and they don’t start to second-guess themselves because the doctor (an authority figure) shows some doubt or suggests hypochondria. I’m not saying there are no hypochondriacs: just that doctors need to sort that out after review the symptoms, and patients won’t tell them the symptoms if they fear the doctor will look down on them.
    3) Medical records shouldn’t be used either to qualify for insurance or to access government services. Both of these things are serving to distort medical information in this country. If a patient wants to qualify for a service, the doctor can sign a qualifying form, and their should be a FAST appeal process on the medical side if the patient objects to the doctor’s decision. Qualification for government services should also be private in case they are used as an alternative medical records.
    4) Medical records won’t matter for insurance if it’s single payer and subsidized for the poor. If the system buckles under a bunch of sick people, then that should signify that there’s a problem that needs to be addressed through better nutrition, safe workplaces, health education, and pollution control. Our society is sick because people are killing each other without remorse.
    5) Workers comp could be replaced with extensions of Unemployment Insurance with doctor’s signature (with medical profession sanctions for corruption in this regard). A whole layer of bureaucracy gone – poof!

  23. //(Better yet, eliminate the business tax deduction for health insurance- nearly $190 billion in 2004 — and give universal tax credits to all Americans for healthcare– but that is not the topic here.)//
    The real problem with this idea is that many people depend on the protections available in employer-provided health care coverage plus a lot of us small entrepeneurs are incorporated. I rather be able to deduct my high premiums than get a universal tax credit that didn’t begin to offset them. Until we fix the individual insurance market so that everyone has affordable access vs. the current system of young and healthy pay little and older, higher risk pay more or are refused, any plan that further shrinks the employer-based pool will just create more uninsured and because the insurance availability/pricing discriminates against those who may need care the most, that means the uninsured pool will end up being the people most likely to use health care and default on payments.
    I do agree about the transparency issue. If my doctor priced “visibly” like my vet and I paid all charges below my $2500 deductible directly, I can’t help but believe my insurance costs (i.e. the cost associated with carrying me as a client) would be insignificant–extend that policy across our entire country and you end up with a system of consumers wisely accessing health and elimination of a tremendous amount of non-value-added administrative cost. Of course, it would make it harder for health care providers to sell unneeded services because consumers could look at pricing and discuss need ahead of time, and it might make it harder make money on billing errors because consumers could compare bills with estimates. And it would probably put the “medical coding” class of admin workers out of business. But it is a better alternative than a system that collapses as the pool of unisured grows and seeks care with no means to pay.

  24. 1. I am still not clear on the definition of “community risk pool”. If it means the number of individuals grouped together to collectively share risk- then no “community risk pool” exists currently, as nearly every business exists in its own risk pool.
    Passing Small Business Health plan legislation- supported by the Nat’l Federation of Independent Business and vehemently opposed by major insurers– would make pools larger.
    Passing Congressman Shadegg’s Health Care Choice Act– which would allow the purchasing of insurance across state lines — would make pools larger and increase choice.
    Passing the legislation to allow entrepreneurs — like Matt and the 400,000 who make a living selling on EBay– to deduct their health insurance premiums, would lower costs and increase choices. (Better yet, eliminate the business tax deduction for health insurance- nearly $190 billion in 2004 — and give universal tax credits to all Americans for healthcare– but that is not the topic here.)
    2. Transparency in physician pricing is essentially impossible in today’s insurance environment. Every insurer has multiple plans- every plan can have multiple deductibles- every plan has multiple copays- every plan has differing co-insurance– has the deductible been met? has the total out of pocket been met? Is there a separate deductible for crutches or a cane? If surgery is indicated is there a separate copay, deductible, coinsurance?
    Restore a market based relationship between consumers and providers– pay for care at the time of service and use insurance as insurance– and doctors will have transparent pricing– e.g. the ads for LASIK, the price for plastic surgery. People could then make a decision on cost, reputation, location, friendliness, wait times, or any other indicator he or she chooses.
    3. Rhetorical question: Why should the same free market forces that allow consultants to compete and thrive in the healthcare marketplace apply to the people who actually work in healthcare?