The “R” word has surfaced. Whether or not Ben Bernanke has said it, everybody else has. The economic indices that we expected to keep rising are falling: housing prices, productivity, the Dow. Unemployment rolls, as well as food prices, are creeping up.
For Governors, R times connote a companionate R word—retrenchment. In the face of falling tax revenues, governors will be struggling to hold the line on health care initiatives. In Massachusetts, famous for its program for near-universal coverage, program costs now outpace revenues. In this season of R, states are unlikely to pass expensive reforms.
But this is also baseball season, and in the spirit of the Red Sox, sometimes states can win victories against insurers on behalf of citizens.
Consider Pennsylvania Gov. Edward Rendell (D)’s recent times at bat. He has proposed four reforms that use state power to regulate private insurers. He, along with everybody who holds an insurance card, knows that private insurers, left to their druthers, will look to their bottom lines, not the public’s good. His proposals merit applause. Here they are.
• No pre-existing exclusionary clauses. Generally when a new enrollee, who has been uninsured, signs up for a policy, the insurer will assess what ails the person. Those “pre-existing conditions” could be asthma, diabetes, cancer, glaucoma—the conditions that make people want health insurance. During an “exclusionary period” that can exceed a year, the insurer will not pay for treatment of maladies related to that condition. If an enrollee has diabetes, the insurer won’t pay to treat related kidney failure—but will pay to set a broken leg. The rule has forced physicians to weigh their Hippocratic oath as patients’ advocates against their role as insurers’ lackeys. Understandably, many physicians, knowing that the patient cannot pay for treatment, will try to fudge the claims. Everybody who is uninsured looks forward to getting back on the rolls. This legislation assures very sick people that their long-sought policy will truly be a benefit.
• No experience rating for individuals and small groups. As an individual purchaser, outside a group, try to find an “affordable” policy. You’ll need to search. The premiums, deductibles and co-pays drive the premiums beyond most people’s budgets. Now try to find an “affordable” policy if you have a serious illness or disability. You may not find anything. The same goes for small work-groups. In a workplace of 25, one employee with a major illness will drive premiums up to the stratosphere. In a back-to-the-future initiative, Gov. Rendell has proposed a limited return to “community rating,” where insurers do not factor enrollees’ health into their pricing. People who are self-insured or work for small firms stand to benefit. Insurers point to the downside: the lucky people in large, healthy workplaces may face higher premiums. But if their low premiums are predicated on a fee structure that shuts out the sickest people, then insurance has ceased to be a public good.
• No insurance payments for “avoidable errors and infections” that occur during a hospital stay. Pennsylvania law would stipulate that if an enrollee suffers from a mishap that shouldn’t have happened, the insurer won’t pay. The federal government is phasing in this rule with Medicare. Many states have done the same with Medicaid. Pennsylvania would give private insurers the nudge to follow suit. This won’t help the patients who have suffered the mishaps. But it will help future patients, by forcing hospitals to institute the safety precautions that experts have recommended.
• 85% of premiums will go to pay for enrollees’ care. Insurers collect premiums; insurers pay out those premiums to physicians, hospitals, therapists, diagnostic testing centers. The rest constitutes administrative expenses, which include salaries and profits. Medicare pays 3% for administration—or 97% for care. Setting an 85% threshold would limit the profits the insurer could reap. It would also give enrollees better care.
These measures will not put a burden on Pennsylvania taxpayers, but on the state’s private insurers. In the spirit of the underdog, let’s hope that these measures pass the legislative home plate.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.
From The Progressive Populist, May 15, 2008
Subscribe to The Progressive Populist