OP-ED

Why “Liking” Your Plan Is Not the Point

In recent weeks, President Barack Obama has been appropriately raked over the coals for saying, multiple times, “If you like your health care plan, you’ll be able to keep it.” He shouldn’t have said it. The problem is, he shouldn’t have said it for entirely different reasons than most Americans think.

Let’s begin with a basic question: What does it mean to “like” one’s plan? And what is the value of this statement? All of this came to a head at an October 30 Congressional hearing with the Secretary of the Department of Health and Human Services, Kathleen Sebelius.

At the hearing, in a cantankerous challenge to Sebelius’s credibility, Tennessee Rep. Marsha Blackburn highlighted two constituents, Mark and Lucinda, who “like their plans,” but were being told they could not keep them because of the Patient Protection and Affordable Care Act (ACA), so-called “Obamacare.” A long-entrenched individualist rhetoric provided the framework for Blackburn’s point, namely that we should allow Mark and Lucinda to keep their plans in the name of individual freedom, just because they “like” them.

For purposes of argument, let’s assume that what Mark and Lucinda’s insurers are saying—that the cancellations are a result of the ACA—is true. But, as we do this, let’s also keep in mind that just because insurers claim premium hikes and cancellations are because of the ACA doesn’t mean that it’s true. In fact, it seems to be true only rarely and, even then, often as a half-truth.

But, anyway, let’s assume it is true. The question then becomes: why is it true? The problem is that this individual freedom is made possible by the assurances of a social safety net. This brings us back to the existential foundation of the ACA, namely that the choice to not carry health insurance—or to carry poor health insurance that individuals may find out, at some point, doesn’t cover something important—simply dumps those individuals into social institutions such as emergency rooms and local care centers, and does so in an extremely wasteful way. This returns us to the problem we started with and a question of whether or not ACA opponents are concerned with solving the problem of building a sustainable health care system.

In other words, Blackburn’s logic, as inspirational as it might be to some, bathed as it is in the rhetoric of freedom, is not premised on an analysis or understanding of health insurance, but deference to Mark and Lucinda to make their own choices, consequences be damned.

Two points need to be made in this regard. The first is that the very logic of health insurance is that customers (who will become patients) do not know what their needs will be. There is imperfect, asymmetrical knowledge on health markets, as health economists have long recognized (Kenneth Arrow wrote the classic health economics statement of this argument in 1963 while George Akerlof, Michael Spence, and Joseph Stiglitz won a Nobel Prize in Economics for hashing out the more complete theory).

Mark and Lucinda’s happiness with their plans is premised on fleeting and incomplete knowledge. They are not seers. Whether or not one “likes” one’s substandard health plan is therefore of little use. The purpose of the ACA’s essential health benefits requirements—the source of the restructuring of American health insurance plans and a key reason why some plans have to go—is that they are based on experience of the health needs of a broader population. They are the outcome of evidence-based considerations, grounded in clinical expertise and data, not just about what Mark and Lucinda need (or think they need) now, but what they are likely to need in the future. In this light, a key question is this: will they “like” their plans when they find out? Either way, “liking” one’s health insurance plan is not rhetoric that we would be wise to take (at least too) seriously. It would be foolish to mold our policy around it.

A second important point is this: If ever there was a need for a bit of paternalism, some regulation on the front end, it is health insurance. Unless, of course, one is willing to go the path carved out by Rep. Ron Paul, who noted in a much-discussed moment at a 2011 Republican presidential primary debate that, “Freedom is all about taking your own risks.” Paul’s protestations of freedom aside, risk pooling is all about minimizing risk when it comes to something as high stakes and socially consequential as access to medical care. Happily for the ideal of a social contract, a majority of Americans have rejected the idea that we will simply “let people die,” which Paul’s audience that night seemed to sanction. Luckily, these people do not tend to make policy, at least not yet.

Let’s connect the dots more directly: for years large numbers of Americans have been unable to keep plans just because they “like” them. The ACA did not invent this phenomenon. As Timothy Jost has noted, in fact, that it is quite the opposite, as the ACA is “quite specific” in asserting that “Nothing in this Act . . . shall be construed to require that an individual terminate coverage . . . in which such individual was enrolled on the date of enactment of this Act.” The public, moreover, would be surprised to learn that this promise has been kept since the ACA is not responsible for the canceled plans, at least not in a direct way. Perhaps out of naïveté, Obama assumed that insurers would start to phase in the ACA’s essential benefits packages rather than bring new customers onto new plans that didn’t pass muster and wouldn’t be phased in under the new rules. For political reasons, Obama took responsibility, but he shouldn’t have.

Instead, insurers kept selling plans that they knew did not qualify and would not be grandfathered in. These are new plans established after the passage of the ACA. While some pro-ACA commentators have been fast to make this point, the seriousness of these unethical actions on the part of insurance companies seem to have fallen on deaf ears.  Even worse, they seem to have “forgotten” to notify their customers of this important fact, leaving them to find out only at the end of 2013. Accordingly, to watch Fox News and to see the Democrats’ capitulation to the “like your plan, keep your plan” meme is to enter into a bizarre world in which it is the ACA—and not health care insurers—that introduced volatility into American health care.

In the pre-ACA years, however, insurers would regularly cancel plans, raise premiums, and increase customer responsibilities in cost-sharing arrangements. State insurance regulators served as a drag on these practices, but they could never contain them. The political story here, then, is that the ACA provided fantastic cover for already established practices. Predictably, and cynically, insurers and their anti-ACA confederates have exploited the ability to blame the maladies of private health care on the ACA, even when doing so stretch the bounds of credulity.

It is easy to understand why not taking what customers “like” too seriously would be politically controversial. As the pro-choice movement has long known, the rhetoric of unbridled choice is powerful. And, of course, who doesn’t like spending the least amount possible? (A major problem, of course, is that as a society we spend more than other nations and get much less in return in measurable health outcomes. But the politics of the ACA tend to play out on the level of the individual, so the “social question” is rarely posed.) But suppose in spending the least amount individuals become dependent upon a system that eventually they find, at some unforeseen point, to exclude something they really need. The ACA insists upon evidence-based benefits, not a laundry list of wants or likes. Obama showed grit in taking on his own constituencies—especially unions—and insisting that the wastefulness of those plans—so called “Cadillac” plans—be addressed. More care is not better care, and may sometimes lead to worse outcomes.

Similarly, insufficient care shifts costs to society. As everybody from the Heritage Foundation to former Massachusetts Governor Mitt Romney to supporters of the ACA have noted, is that at that moment the problem becomes social. In other words—and here’s a juicy ideological inconsistency—the failure to go the route of the ACA encourages free-riding. Where are the conservatives crying foul over a system that encourages free-riding and even moral hazard? Isn’t moral hazard a close relative of simply responding to the preferences—the likes and dislikes—of individuals? The ACA is trying—even if in a non-ideal way—to balance all of this out.

Again: some plans do have to go. Allowing Americans to pay for substandard plans is not a responsible policy option. But the trickier cases are those in which insureds say their plans are equal to or better than the ACA-sanctioned ones but are being canceled anyway, or are experiencing skyrocketing premiums. There are only two possible reasons for these situations, both the responsibility of health insurance companies: either they established them after the ACA was passed, knowing full-well that they would not be grandfathered in, or they are canceling them and raising rates because they can use the ACA as a smokescreen. Either way, the reason why so many Americans cannot keep these plans—even if they “like” them—has nothing to do with President Obama’s promise. It is a symptom of the state of American political culture that the health insurance industry has made it out of this process unscathed and even bestowed with a renewed moral force.

Commentators have noted the fact that only a comparatively small percentage of Americans are substantively impacted by these cancellations. But these still number in millions. Nonetheless, there is a critical question here of who, exactly, should be responsible for rectifying the situation. In a more optimal political environment, we would start by establishing a commission to investigate the health insurance companies themselves.

This only highlights the importance of establishing effective oversight on the side of consumers, perhaps along the lines of the newly minted Consumer Financial Protection Bureau, established to watch the banking industry. This shouldn’t be controversial: the ACA is, indeed, a boon for American health providers and the various businesses that stand to gain from expanded consumer base. The health care industry should welcome a chance to prove that they are and will be good faith actors, especially considering the benefits they are likely to reap. As I’ve noted, however, one major curiosity of contemporary health care discourse is the absence of any sustained criticism or scrutiny of health care providers—especially by the ACA’s critics.

But this important work shouldn’t take us off the trail of the “like it, keep it” meme. The way the media has behaved in the wake of public perceptions that Obama lied in making his promise says much about the quality of our political discourse and very little about the ACA itself. If we are to move forward seriously with the important work of ensuring that all Americans have access to affordable, quality health care, we will need a more pointed discussion about the nature of health policy. If we are going to use social policy to empower private companies, then we must scrutinize their behaviors. Whether we have this kind of vigilance in us is a major question. What is clear, however, is that the childish discourse of “liking” something—so common in the age of Facebook—is simply not helpful.

Daniel Skinner, Ph.D is a professor of health policy at Ohio University’s Heritage College of Osteopathic Medicine, Dublin, OH. You can follow him on Twitter at @danielrskinner or email him at skinnerd@ohio.edu.

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Chris HollandPerryJoel Hassman, MDMichael TurpinAnge J. Recent comment authors
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Perry
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Perry

Yes, unfortunately you are correct.

Perry
Guest
Perry

I would “like” not to have to depend on insurance in the first place. Then I can see my doctor and not have to worry about filling out numerous idiotic forms, the doctor can spend her time on a history and physical exam without wasting time on an inadequate EHR system. She and I can discuss reasonable treatment options and plans based on current scientific evidence and discuss pros and cons of costs, etc., not be tied to what the insurance company or the government feels is in my best interest.

Peter1
Guest
Peter1

“I would “like” not to have to depend on insurance in the first place.”

Seems to be lots of “concierge” docs out there where you can pay a monthly membership for unlimited need-them-or-not access. Go for it.

But you’ll also have to pay monthly insurance premiums.

Joel Hassman, MD
Guest
Joel Hassman, MD

How ludicrous a title of a post, much less the content that follow! Only pure partisan platitudes would come up with such a disingenuous and dishonest rationalization. Sure, people want to spend $10,000 or more a year for insurance coverage they detest and deplore. Is this how stupid and vain the Obama administration and their cronies have become to attempt to brainwash Americans to buy the snakeoil they have been erroneously selling these past near 4 years now?! Got, to listen to the failed rhetoric of Repugnocants back in the early 2000s why we had to bomb and invade another… Read more »

Michael Turpin
Guest

Most people “like” their coverage because of access and costs, not quality. The average American’s basis of judging healthcare in a third party payer system is a sophomoric and subjective algorithm whose numerator is ( access+beside manner+convenience) – (third party UR intervention+how many people in the waiting room looked like they were in a lower socio economic income bracket than me ) divided by my personal out of pocket costs. This tends to promote poor consumerism, over treatment, fraud, and enormous variability in unit costs based on the perception that “more is better” and that a university hospital ER must… Read more »

Ange J.
Guest

“Like” really may have not been the best term for it. First of all, you get a plan based on your needs, not wants. You may “like” your plan because it can get you by but are you “satisfied” with it and is it sufficient for your needs? This goes to show how simple statements can have a huge impact on the entire message.

Bob Hertz
Guest
Bob Hertz

There is a tendency to blame the mandates for maternity, contraception, pediatric dental, et. al. for the tremendous increase in insurance premiums. This may not be whole story. I have read some studies which show that mandates add five or ten per cent to premiums in the individual market. Instead the real cost driver is guaranteed issue and not excluding pre-existing conditions. In the old individual market in 45 states, the insurers could exclude the sick and charge very low rates to healthy persons. Rather like a 35 year old getting $500,000 of term life insurance for $50 a month.… Read more »

legacyflyer
Guest
legacyflyer

” …. the ACA’s essential health benefits requirements …… are based on experience of the health needs of a broader population. They are the outcome of evidence-based considerations, grounded in clinical expertise and data …” Reading these words of Daniel Skinner almost brought tears to my eyes. These brave and wise experts – mostly with Ph.Ds – sitting around a table and doing what is right for the common man. Surely, this must be the basis for deciding which benefits are “essential”. But then other troubling thoughts crossed my mind. With 17% of the economy at stake, large companies; insurance,… Read more »

Peter1
Guest
Peter1

“These brave and wise experts – mostly with Ph.Ds – sitting around a table and doing what is right for the common man. Surely, this must be the basis for deciding which benefits are “essential”.” Legacy, what process do insurance companies and employers use to decide what’s “essential”? Do you think they have more affinity for the common man? Do you think less education makes one “smarter”? I agree that the designers of this legislation did not go far enough up the income ladder to determine “subsidies” or the consequences of using the subsidy design, but that would have meant… Read more »

legacyflyer
Guest
legacyflyer

Peter1, My point was merely to question the supposedly pure motives that the author believes were behind coverage mandates. I think that employers and to a lesser degree insurance companies probably have a pretty good idea of what employees/consumers want. Obviously insurance companies’ motives are not pure either and I am sure that they lobbied heavily for what they wanted in the ACA. What kind of coverage to put in a policy is a balancing act; each new requirement means a new cost to be added. My opinion is that health insurance should be more like car insurance/car warranties. These… Read more »

Bob Hertz
Guest
Bob Hertz

Prof. Skinner is correct that the funding of care for the uninsired is a problem, and ‘free riders’ are a problem. The question is whether the ACA is the right solution. According to a detailed study by Jack Hadley, the amount of uncompensated care in hospitals is in the $35-$40 billion range. Some of these expenses have been covered for years by state funds and the Medicare DSH payments., If 30 million adults are uninsured, we could have made each of them pay extra income taxes, and funneled that money to safety net institutions. We could also raise income taxes… Read more »

Peter1
Guest
Peter1

“We could also raise income taxes on all Americans by a per cent or two, in order to fund high risk insurance pools on a federal basis.”

Bob, I would favor a mix of sales and income tax. There are a “tremendous” amount of for cash unreported income people and I’d bet most of those are uninsured. They expect services but don’t want to pay for them.

archon41
Guest

Ach, what burden more heavy, than having to decide for people, over their objections and protests, what is really “for their own good”? It is an exercise calling for the utmost nobility of thought and purpose.

Peter1
Guest
Peter1

“The problem with ACA is that it is economically unsound in that households live on budgets.” BC, how was the “old” system “economically” sound? Except the option to not buy or buy junk “false security” policies and then eventually need charity care. “While a problem, most households were able to absorb a 5-10% bump in insurance per annum under the old system.” Really, where is your justification for that – rising wages of 5-10% per year? That 5-10% was compounded by the way. “ACA’ biggest failing is that it does nothing to control the high and ever increasing costs of… Read more »

BC
Guest
BC

Peter: I fully admit the old system had big problems and things like medicare are not sustainable. So the right thing is to fix this even if gradually. ACA does not do this it makes it worse. I never said 5-10% HC cost increases per annum were good or justifiable rather it’s easier to take a 5-10% cost increase than 50-100% in a year. So what will ACA do to address the very high cost of medicine, which is directly related to the lobbying and malfeasance of the large players? And you’re right – not easy to do politically because… Read more »

BC
Guest
BC

Peter: The need for bailouts like TARP and S&L is directly due to the fact that Congress (both parties) do not do their jobs properly, which again is due to lobbying. The House and the Senate both have banking/finance committees equally comprised of Dems and Repubs, but Congress has failed miserably in their responsibility to maintain a stable economy as evidenced by the boom and bust of the last three bubbles. They either did not enforce existing sound regulations, repealed sound regulations or did not create new regulations as needed. So look at the trend… IPOs/LBOs/S&L – 80s, tech –… Read more »

BC
Guest
BC

Archon:

“As for insurers profiting from this scheme…..”

The market doesn’t share your point of view.

http://www.cnbc.com/id/101202791

“bellwether health-care stocks such as Aetna, Cigna, UnitedHealth and Gilead are all trading within shouting distance of 52-week highs”

To the extent that insurers get hit due to small/large corporate mandate delay you can bet they will get a TARP like bailout to cover any losses.

archon41
Guest

I cheerfully stand corrected on that point. Still, I doubt that the prospect of insurer profitability will joy the hearts of those who are being adversely affected by Obamacare.

BC
Guest
BC

Archon: Of course it will not bring joy to those adversely affected nor should it. I was trying to emphasize that ACA is a boon to large HC players at the expense of the middle class. How much the lower income demographic benefits is unclear given that 20% of the population is already on medicaid. And it’s the middle class in any society that brings stability and this is gradually being eroded in the US. Brazil and China both have large instability problems as the middle class is too small. In fact, China will be ripe for revolution if we… Read more »

archon41
Guest

Be that as it may, those who believe they have been deceived and misled aren’t going to be placated by invitations to make insurers, yet again, their “whipping boy.” The “winners” here are part of the Democratic base. Many of the “losers” are going to be jumping off the “hope and change” bandwagon. They aren’t going to be impressed with theories that the insurers deviously manipulated the Democrats into passing the ACA (if that’s what you’re suggesting.)

BC
Guest
BC

Not putting it on insurers at all. They certainly benefited though. The whole bill was architected by the dems and all blame falls squarely upon their shoulders.

And I think it’s going to cost them big come midterms.

archon41
Guest

Nice spin, but any way you try to cut it, you can’t conceal the fact that, under the banner of “social justice,” we are forcing a broad segment of the Middle Class (those who don’t qualify for subsidies) to fund the medical expenses of the indigent and uninsurable. You really think they are going to blame the insurers, and not the politicians who passed the ACA, for concealing this from them? As for insurers profiting from this scheme, who, given the actuarial uncertainties of the exchanges, would be brainless enough to put any substantial part of their retirement savings into… Read more »

Peter1
Guest
Peter1

“we are forcing a broad segment of the Middle Class (those who don’t qualify for subsidies) to fund the medical expenses of the indigent and uninsurable.”

Showing some “compassion” are we?

archon41
Guest

So rather than try to flim-flam them with convoluted sophistries, why don’t we just tell them that they are a thorough, worthless lot?

Really ought to be some way to take the vote away from them.

Adam
Guest
Adam

Central planners will never understand why us proles aren’t screaming thanks for their gift (the ACA) to us.

Peter1
Guest
Peter1

Adam, it’s a “gift” if you have pre-exist or get a subsidy. Is Medicaid a gift? Is Medicare a gift? What would you like?

MD as HELL
Guest
MD as HELL

Peter1,

You clearly have a pre-existing problem. Sorry about that. Medicaid and Medicare ARE gifts…not rights.

The taking from the making is sinking the ship, shich is insane.

All will have coverage and none will have care.

Peter1
Guest
Peter1

“You clearly have a pre-existing problem.”

MD, I don’t have a pre-exist nor do I qualify for a subsidy. I pay the full bore.

MD as HELL
Guest
MD as HELL

Thanks for clarifying. Then what is your point to your endless rhetorical comments?

Peter1
Guest
Peter1

“what is your point to your endless rhetorical comments?” From Wkipedia: “Rhetoric is the art of discourse, an art that aims to improve the capability of writers or speakers that attempt to inform, persuade, or motivate particular audiences in specific situations.[1] As a subject of formal study and a productive civic practice, rhetoric has played a central role in the Western tradition.[2] Its best known definition comes from Aristotle, who considers it a counterpart of both logic and politics, and calls it “the faculty of observing in any given case the available means of persuasion.”[3] Rhetorics typically provide heuristics for… Read more »

MD as HELL
Guest
MD as HELL

……and your point is you have no point?

BC
Guest
BC

The problem with ACA is that it is economically unsound in that households live on budgets. The vast majority of people above the subsidy line are going to have much more expensive health costs and in truth some that receive a partial subsidy may also have more expensive health costs. Unlike the Fed, a household cannot “quantitatively ease” their income to a higher level. While a problem, most households were able to absorb a 5-10% bump in insurance per annum under the old system. But it is very difficult for most and impossible for some to absorb an increase of… Read more »

Peter1
Guest
Peter1

“the seriousness of these unethical actions on the part of insurance companies seem to have fallen on deaf ears. ” But insurance only owes its allegiance to its investors, it does not have a responsibility to the insured – they have demonstrated this over and over again. These “like my planers” only liked the price, and did not “like” provisions in the ACA plans that created larger pools so that they now pay for universal pregnancy coverage for instance. It’s the continued raising of premiums that angers policy holders – something they were very familiar with before the ACA. The… Read more »

Chris Holland
Guest

In a free market insurance companies are responsible to their customers. Choice is the major driver of innovation and cost, which is why cross-state purchase of health insurance would be a positive development.