HEALTH PLANS/POLICY: Emily Firedman rips the individual market a new one

Nothing that you haven’t already seen on THCB many time before, but in taking on (and slightly misrepresenting but not much!) the Mass concept that we should just tell all the uninsured to buy into the individual market, veteran commentator Emily Friedman has created a wonderful  blistering critique of the individual market and the parasites that dwell in it.

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  1. Peter — Since it is extremely unlikely that anything substantive is going to happen nationally on healthcare reform during the final two years of the Bush Administration (regardless of the outcome in the 2006 election cycle), this is an ideal time to get some real world experience at the state level to learn what works and what doesn’t. Healthcare consumes 16% of GDP in the U.S. and if it is going to be reformed, I want to see as much substantive experience as possible from within the U.S. that is proven to work in our society and our culture. I have always believed that experience is the best teacher. Let’s learn what we can during the next two years and have a vigorous debate during the 2008 election cycle. For what it’s worth, I think it would be easier for the Democrats to provide the leadership on entitlement reform just as in the early 1970’s, Richard Nixon was able to take the lead in improving relations with China. If Democrats have the guts to come up with some substantive ideas beyond just soaking (via much higher taxes) a small sliver of high income people ad infinitum, they might be able to attract bi-partisan support.

  2. Barry, here’s a good working opinion on mandated health coverage that I found from one of Matthew’s links.
    Emily Friedman:
    “Her basic point — it’s wrong to mandate individuals into a dysfunctional, rigged, and overly expensive health insurance system.”
    We’ll see how much MA does to take the rigging, dysfunction and expense out of their system. I’m not holding my breath.

  3. Well the plan does give politicians and their industry feeders some more time as everyone says let’s see how the MA plan works out. The fact that the Heritage Foundation had a hand in it leads me to think it is a providers plan, not a patients plan. Some research found some of the administrative requirements in the plan that will add costs while not controlling provider costs.
    “Every employer and employee in the state must sign “under oath” a Health Insurance Responsibility Disclosure form, testifying to whether the employer has offered insurance and whether the employee has accepted or declined.”
    “It creates at least 10 new boards and commissions to create and run the new health system, such as the Health Care Quality and Cost Council, Payment Policy Advisory Board, and Health Access Bureau.”
    “New and existing state agencies will be checking on individuals’ insurance status, monitoring their income to see whether they qualify for subsidies, and tracking individual health habits (such as smoking and wellness activities) to determine their insurance rating category.”
    As to your fraud comments I think you are right. This country is getting to look like Nigeria in the level of corporate and political corruption. But voters have become so cynical, a condition that feeds even more corruption, that corruption is low on their list of political concerns. It’s just a cost of doing business.

  4. Peter – Current estimates that I have heard are that 175 million people get their coverage from employers. Employers are already free to stop providing health benefits to their employees. They offer health benefits because employees want them, and employers are interested in attracting and holding competent people.
    The 300% of poverty threshhold for subsidies is what Massachusetts is using. The state subsidy covers the entire cost of the premium at very low incomes and phases down to where it is quite modest at 300% of FPL. I don’t think making just slightly over the limit would be much of an issue. As for people who lose their coverage because they become too sick to work, presumably, they would qualify for a large or even complete subsidy if their income disappeared. The Massachusetts plan just started up on October 1st, so we will have to wait to see how it plays out. At the very least, we should learn some valuable real world lessons about what works and what doesn’t.
    I assume that healthcare reform (including single payer) will be a hotly debated topic during the 2008 presidential election cycle. One thing that troubles me is that absolutely nobody that I have been able to identify has a good handle on the cost of fraud at either CMS or private health insurers. I think we could use some substantive research on that subject before the overall reform debate shifts into high gear.

  5. Barry, you say that your way would be to offer the individual market access to Medicare and the FEHBS (community rates). I wonder how private insurers would react if they found themselve in competion with the feds? And then how many employers would look at that option in deciding whether to offer employer coverage? It may however get us closer to a single pay government system. I also assume your 300% of poverty level would be in 06 terms about $60,000? $60,001 and up no subsidy? Who would administer such a program? How many people would refuse raises and limit extra work to keep the subsidies? And of course the sliding scale of deductibles verse pemiums is all about the affordability details. People with less income could not afford either the deductible or the premium depending on the cost of each. As to your peace of mind for catastophic coverage, I don’t think there is any peace of mind in this system. If your health impedes your ability to work and pay premiums/deductibles you will loose your coverage and more than likely your home, and forfeit all monies paid into the system. I think a lot of the uninsured have figured this out, they would be twice loosers if they really got sick and couldn’t work, once in the premiums they’ve paid and twice in loosing coverage they couldn’t maintain. Better to pay as you go for minor health problems and end up in the same place anyway if you get really sick. And of course with this non-transparent system know one knows what their out of pocket expenses would be for a hospital stay, given co-pays that only the insurance company decides what they will be.

  6. Here’s an interesting link that includes a lot of data, but as you know, when and where you get “data” often colors it. Most of it looks reasonably accurate.
    Unity08 is a group forming to start a “center” political party for 2008. They haven’t yet picked a candidate.

  7. Jay–She may be a crazy lady on the corner. But if you hunt around in THCB you’ll find plenty of documented evidence for the sins of those in the individual market. And I note plenty in your blog too!

  8. I think the problem of high administrative costs and skimpier benefits in the individual insurance market could be addressed by opening up access (at community rates) to Medicare and the Federal Employee Health Benefit System. People could be offered a range of deductibles from low to quite high with sliding scale premium subsidies for those with income below 300% of the federal poverty level (FPL). If they can get a better deal in the individual market, go for it. Even for people who cannot quite afford a high deductible, the peace of mind that comes from knowing you have coverage if you suffer a catastrophic event is worth a lot. It would also mitigate the problem of free riding, especially with respect to hospital related care. It may not be a perfect solution that will work for everyone, but it’s a lot better than throwing those who do not have employer provided coverage or Medicare or Medicaid into the high cost individual insurance market. People cannot expect to wait until they get sick and then be able to buy health insurance for a competitive price. Under the circumstances, mandating that people buy coverage if at all possible looks like the least bad alternative.

  9. Reading that seemed more like listening to a crazy lady on the corner than reading an article. She had a lot of misleading facts and stuff that appears she just made up. It would be nice if she could’ve provided sources or links other than “Another friend of mine”.