• Lack of detail: A preexisting condition of Governor Romney’s health plan

    This week, John Goodman published a Wall Street Journal op-ed, here, concerned with the issue of preexisting conditions. His essay prompts me to post the below comments, which are notes from a short presentation. I’m afraid my material is pretty basic for this audience.

    The most popular aspects of health reform are those which protect Americans with preexisting conditions. Governor Romney is under pressure to explain how he would address these matters given his pledge to repeal health reform. He recently announced that he would support some sort of open enrollment period, when everyone can buy insurance without penalty for preexisting conditions. People who remain continuously insured would then enjoy basic protections similar to those already provided within the large-employer market through the 1996 HIPAA law. The Romney campaign has not, to my knowledge, provided further details.

    This plan is better than nothing. Ironically, the continuous coverage provision is a de facto individual mandate. People who stay covered will enjoy important protections. Others won’t.

    Unfortunately, it is a small step that does not address the core issues. Right now, about four million Americans are both uninsured and have been diagnosed with serious conditions: Diabetes, cancer, heart attack, stroke, emphysema, and the like. Millions of other people have other preexisting conditions that create health problems and that foster discrimination within the small-group and individual insurance markets. How do we deal with this problem?

    A good starting point is to ask: Why are these four million people uninsured in the first place? One obvious answer is that they have trouble paying for coverage. These are people with modest incomes, and insurance is quite costly. This particular group may be excluded from the insurance market. Yet many may also have been uncovered before they became sick. Insurance is expensive. People become stuck between jobs. People ignore health problems and take stupid chances. When fifty million people lack health insurance coverage, some fraction are going to become very sick, and, hence, medically uninsured.

    The Affordable Care Act deals with these problems through an individual mandate, insurer nondiscrimination provisions, and a combination of Medicaid expansion and health insurance exchange subsidies to ensure that people have access to affordable coverage. Each of these pillars is required elements of health reform. Repealing health reform’s Medicaid expansion and the exchange subsidies will increase the number of uninsured by roughly 30 million people relative to current law.

    ACA also includes provisions make sure that health insurance actually protects people with costly conditions.  Addressing commonsense notion of underinsurance matters for these issues, too. 

    These provisions include provisions to limit patient out-of-pocket payments, and to phase out annual and lifetime dollar-caps on what insurers will actually cover in cases of costly illness or injury. There was just a tragic case in south Chicago, of a high school football star named Rocky Clark who was rendered quadriplegic on the gridiron. He required intensive nursing care and other services. He hit his lifetime cap. His mother cared for him as best she could. He died tragically, leaving his mother with a stack of punishing medical bills.

    ACA also guarantees an essential health benefit package, so that insurance actually covers a reasonable standard of care. Insurance must be affordable. It can’t cover everything. Difficult decisions must be made. Insurance does need to cover reasonable treatments. An Institute of Medicine committee struck a reasonable compromise, recommending a standard based on benefit packages similar to that covered by a typical small employer.

    The Romney campaign hasn’t provided the fine-print–or even the medium or large print–regarding such matters.  Based on what’s been revealed so far, it won’t do the job for people with preexisting conditions.

    • Republicans have had every opportunity over many generations to reform the health insurance markets so that health insurance is affordable and available to majority of US citizens. The only time they ever present any plans is during elections seasons or when a Democratic plans shows some likelihood of passing. Once the tide recedes and they are victorious, healthcare reform is nowhere to be found in their agenda.

      Mr. Pollack, you need to stop believing that they (Republicans) are interested in reforming health insurance markets or moving the country towards any semblance of universal healthcare access. They are not. Let’s call them out on it and make that the basis for our arguments.

    • The problem with this post is that it discusses only the benefits of the ACA and ignores the cots, as if there were a free lunch.

      The problem with guaranteed issue and community rating is that people have an incentive to game the system – remaining uninsured until they get sick, then insuring, getting care, getting the medical bills paid and then dropping coverage after the medical bills are paid.

      A mandate doesn’t help much if the penalty for ignoring it is low, the enforcement tools are strictly limited and the IRS has announced that it isn’t going to enforce the mandate anyway. See here:

      Also, the ACA is basically not paid for, since it requires cuts in Medicare spending that are so draconian that no one inside the Beltway thinks they will ever take place. See here:

      Almost anything Romney proposes will be better.

      • Then the mandate should have failed in Massachusetts?


      • While the Affordable Care Act poses considerable fiscal risk, I don’t believe Romney would be able to offer a better plan because he would rely on the same market-oriented solutions. Under the Affordable Care Act we are dramatically expanding coverage – which is good – but placing our trust to control in aggressively profit seeking organizations – which is foolhardy.

        By forcing so many people into fa small-number of for-profit insurance companies we need to ask whether we are creating “too big too fail” health insurance companies who will allow costs to spiral out of control and need to be “bailed out” by the taxpayers at some future point in time. When you look at lack of price restraint by all participants in the health care industry, the fear that health care may be the nations next “bubble” becomes inescapable.

        Ultimately we will need to move to the German model where we abolish for-profit insurance companies and replace them with non-profit sickness funds operated as regulated public utilities.

      • John: a few quibbles about each of your points.

        First, with regards to the mandate, when it is fully phased in, the penalties assessed by the federal mandate will be relatively similar to the penalties assessed by the Massachusetts mandate, and they saw a pretty dramatic decrease in uninsured numbers. Beyond that, the penalties will actually end up being much higher than the cost of insurance for people who make a lot of money. Why would you expect that this will not provide a good incentive for people to buy insurance? Do you really expect that the millions of tax filers who apparently like getting refunds will suddenly start setting their withholding properly to avoid having a refund garnished?

        Second, with regards to the Medicare cuts, you describe them as so draconian that nobody expects them to take place. Yet hundreds of Democrats voted for them as a part of ObamaCares in 2010, and hundreds more Republicans voted for them as a part of Paul Ryan’s budget in 2011 and 2012. That’s a pretty overwhelming supermajority of Congress that agrees with these cuts. Why do you expect that all of these hundreds of Congressmen will suddenly change their mind on these cuts and vote to stop reducing reimbursement rates?

        Third, with regards to what Romney would come up with in a counterfactual universe where he is elected, you assert that “almost” anything he comes up with will be a better plan. As of right now, the most clear part of his Medicare plan is to reverse the Medicare cuts and restore increased spending. This will accelerate the emptying of the Medicare trust fund. How is forcing Medicare to go bankrupt a better plan than making it sustainable for a longer time?

      • This is not what we have seen in practice. None of these fears were realized in MA. None of these fears are realized in other countries with universal or near universal coverage.

    • but placing our trust to control COSTS, in aggressively profit seeking organizations – which is foolhardy.

      • It is not nearly as bad as you make it sound. Once coverage reaches near-universal other measures can be taken. Global payments etc are all predicated on there being no giant risk pool sitting out there (i.e. no 50 million uninsured people).

        Once everyone is covered the insurance companies can be made into partners in cost containment.

    • Republicans expect to harvest the votes of seniors on Medicare, and other Americans with good jobs and reasonably secure health insurance.

      The uninsured and those who care about them are not a major voting bloc, or even a voting bloc at all. George W Bush won large majorities as governor of Texas while that state had more uninsureds than most other states have people.

      A few Republicans do care about the uninsured, and their solution used to be high risk pools. Experience is shown that these pools must be subsidized with tax dollars, or else the people who need them will find them unaffordable.

      The high risk pools must shed the ludicrous rules that have been attached to them in some states, i.e. that one must be uninsured for a year before even being eligible to apply for the pool.

      When properly designed and funded, a high risk pool will probably look like the Public Option. Any Republicans who are sitll hanging in there at that point deserve to be listened to. Based on his writings, Dr Goodman may in that group.

    • The Rocky Clark case is tragic. What would his fate have been in Canada, the UK, and France?

    • Mr. Goodman talks about all those wishing to “game the system.”

      Those inclined to game the system will do so with the individual mandate as I am sure they do with everything else they can like cheating on their taxes or under-tipping the waitress.

      That’s a condition of character and not more applicable to health insurance than anything else. The logic doesn’t follow that we should not correct a major problem to access because some people will behave irresponsibly.

      And if ducking out of one’s responsibility to carry health insurance becomes a real problem when a means is provided to get real insurance then that problem can be addressed.

      Also, I know Mr. Goodman is well aware of the funding mechanisms in the law. He may not BELIEVE that slowing growth by shifting rewards for outcomes, incentivizing prevention,implementing some tax changes for incomes over $200,000/$250,000 and all the other things in place will work, but there are many learned people who disagree.

      I am always curious about what is really gnawing at people who are so vociferously opposed to this healthcare law that contains so many GOP ideas.

      What is being protected at such a huge cost in human suffering?

      It’s time to start and start now. No more waiting. We will tweak as we go if we have to.

      I’m always looking to interview that uninsured person with a preexisting condition who cannot get health insurance and is OPPOSED to the healthcare law . Someone who says, “Oh, I am just fine with not getting my MS medicine to the tune of $60,000/year because we need to throw away this new law until future brilliant ideas make the system better.”

      What is really going on in people’s minds? What are they “losing” by having this healthcare law go forward?

      • I’m always amazed by the contortions advocates of “free markets” go through to preserve health insurance. Face it, some people are not profitable to insure. In order to cover them, you have to apply all sorts of government regulations making the market pretty far from “free”.

        Why not just get rid of the insurance companies? Whatever the structure of the market for medical care that would arise in the wake of abandoning efforts to make insurance companies not avoid the plague-ridden like the plague, it’s hard to imagine it would be less “free” than an insurance market dedicated to ensuring that the diabetic, hypertensive cancer survivor gets the best care available.

    • The solution to a Ricky Clark case, as I understand it, is this:

      Mandatory assignment, and no balance billing for involuntary care.

      In other words, if the insurance company (or Medicare, or Medicaid), offers to pay $100,000. then the facility is legally requited to accept that.
      Balance billiing would not be allowed in circumstances where everyone wold agree the patiet had ho choice.

      This is much cheaper than requiring all health insurance policies to have a $1 million or $2 million maximum.

      Let the insurance policies have even a $100,000 maximum. Then place regulations on hospitals.

      • What you are suggesting is that hospitals replace government and private insurance as the insurers for catastrophic health problems.

        I question whether that would be a good idea. First, hospitals do not have large surpluses to tap for the costs and would have no choice in that situation but to pass the costs back to the insurers and to other patients in the form of cost shifting. Second, I would worry that this type of rule would push many hospitals to abandon types of care likely to lead to huge cost overruns, including neonatal ICU’s, burn units, neuro intensive care, and so on.

        If you want to create a supplementary insurance system to relieve insurers and patients of the costs of catastrophic care — not an entirely bad idea, I would suggest that the government is a more likely candidate, perhaps financed by “sin taxes” on tobacco, alcohol, and junk food. This would resemble the existing policy for the government, through Medicare, to act as the insurer for care of severe renal failure.

    • Thanks for your comments, Pat.

      I am 100% committed to the principle that the patient must not be responsible for huge involuntary hospital costs. That is barbaric.

      Now, my belief is that if an insurance company will pay $100,000 for a long hospital stay, that is enough in 99% of cases.

      There are a small number of patients with comas and shock that must stay in a hospital for 6 months or more. That can be handled with a federal reinsurace program (or the patients can be transferred to VA hospitals, which are already paid for.)

      My program would require price controls on expensive drugs which have no substitute. I would cap all drug prices at $1,000 a month max.
      There are a tiny number of drugs which actually cost more to produce — but otherwise the high prices are just gouging.

      I completely agree with you that some form of Medicare could be the insurer of last resort on the outlier cases. I have no problem with the nation as a whole sharing the costs of extreme illness.

      My basic point is that when hospitals send out bills of $500,000. the bills are mostly bogus. Rather than force insurance companies to pay this extortion, we should push back on the hospitals and cap their payments.

      I have never run a hospital, so I may be wrong. My opinion is that many hospitals are overpaid, overstaffed, over built, over-mortgaged, and over equipped,