• The surprise du jour

    I get a little ticked off that the fanning and fainting that seems to occur whenever something entirely predictable happens with respect to health care reform.  The shocking surprise du jour:

    Some of the country’s most prominent health insurance companies have decided to stop offering new child-only plans, rather than comply with rules in the new health-care law that will require such plans to start accepting children with preexisting medical conditions after Sept. 23.

    The companies will continue to cover children who already have child-only policies. They will also accept children with preexisting conditions in new family policies.

    Yep.  Not surprised.  Nor am I going to defend the PPACA or attack the insurance companies for this.

    As I’ve said consistently, the law only works (as well as it can) when all its parts are in place.  You can’t institute community ratings and guarranteed issue without a mandate.  And you can’t have a mandate without subsidies, but that’s for another post.

    In a rush to score political points, the law immediately told insurance companies that they can no longer deny coverage to children with pre-existing conditions.  But, in a desire not to make the bill look too expensive or too rushed, the mandate doesn’t kick in until 2014.  So, until then, there is nothing in place to prevent parents from gaming the system.  They can wait until kids get sick and then get them coverage.

    That’s bad for the insurance companies.  And, to be honest, unfair.

    We could solve this in any number of ways.  You could remove the regulations until 2014 (not good for kids).  You could move the mandate up for children now (not popular).  Or you could try something else (not going to happen).

    What you can’t do is pretend that this wasn’t inevitable, regardless of how you feel about the law.

    • There is a simple fix in the meantime, and I’d bet a lot of states make it: simply allow individual children-only policies to have enrollement windows only during a certain period, like Jan 1 to Jan 31. That way you can’t game the system (or have a lot to lose if you do) by waiting.

    • I am sure none of the comment below is new news to you, but I have watched the transformation of health INSURANCE from stated value policies based on RVS codes ($200 for a broken arm, etc.) to what we have today.

      Back in the 70s when I was in the insurance business and Prudential (and others) came out with “revolutionary” policies that paid 80% of “reasonable & customary” fees. In the beginning there were no health questions and no underwriting for children. It didn’t take long for people with children who had pre-existing conditions to find and purchase these policies. The insurance company quickly went “upside down” with claims. It had not priced for this “adverse selection”. The policies could not be canceled, but the insurance companies stopped offering them to new buyers. As a result, the claims, admin costs soared compared to the inadequate premium-so rates went up for that “class” of policies until people were forced out due to the intolerable premiums. The companies sold the similar policies at higher premiums, but added underwriting for children and either rejected them or rated them highly.

      So, I have seen the effects of underwriting, fraudulent policies and practices by some insurance providers, increased utilization when the insured has no “skin in the game”, managed care, technology advances, malpractice insurance issues in the litigious world and much more.

      Additionally, my wife has been on the medical side managing the back office of individual physicians to 200 employee group practices. We have discussed and argued over the last 36 years of our marriage the insurance flaws and the practice flaws.

      I think our big mistake was to allow companies to provide insurance as a fringe benefit back in the days of wage controls. Had insurance been and individual responsibility, we would have evolved differently and would probably have had a Medicare-like system long ago. Don’t get me started on the burden of the Medicare regulations-and please don’t get my wife going….

      Thanks for you input. I don’t always agree, but enjoy the intelligent discussion.

    • But if a Public Option had been part of the ACA, then wouldn’t insurance companies have been more likely to cover kids now, at whatever loss that would mean for them, in order to win and keep customers through 2014 when the Public Option came along? I think so.