Dx: Fear Rx: The Facts about Health Care Reform – Private Insurance Reform
by Alta Price, M.D.(cross posted at Quadsville.com in Dr Dx's Blog)
Private insurance companies are donating 1.4 million dollars a day to members of Congress to fight Democratic proposals for health care reform like HR 3200. They prefer Republican proposals ending employer-based insurance and government run programs like Medicare, forcing everyone into the less regulated individual market. In the individual market they can sell junk insurance, refuse to sell policies to people with pre-existing conditions, and drop people who are unfortunate enough to become ill.
The federal government is already heavily involved in health care, and not just by providing programs like Medicare. For example, thanks to government intervention in the health care marketplace, if you work for a company that provides insurance, you can’t be denied coverage because of a pre-existing condition. These government regulations are the only reason private insurance works so well for so many. And employers’ contributions to health care premiums aren’t considered taxable income, which is a tax subsidy from the federal government that helps you afford insurance. Paul Krugman’s recent column explains all of this in detail.
Under HR 3200, the same types of regulations and subsidies are used to make decent insurance available to everyone. In addition, HR 3200 would limit out-of-pocket expenses (like deductibles and co-pays), provide full coverage for preventive care, prohibit dropping coverage for those who become ill, end annual or lifetime caps on benefits, guarantee insurance renewal, and extend family plan coverage for your children through the age of 26.
The news is not all bad for private insurers. There are strong incentives (or penalties) to encourage businesses and individuals to purchase insurance. Most businesses would not even have access to the Health Insurance Exchange, so they are forced to buy from private insurance companies. Even in the Exchange, most businesses and individuals are expected to buy a private plan, not the public plan that would also be available (“studies” showing otherwise come from industry groups). And think how much money private insurance companies will save on overhead when they don’t have to try to weed out those with pre-existing conditions before issuing a policy.
Here are some of the false claims (and one true claim – woot!) made about private insurance in the House bill, HR 3200 (you can read the full text of the bill here). The Truth comes from Health Care for America Now, one of the lead coalition groups fighting for health care reform.
“Page 72: All private healthcare plans must conform to government rules to participate in a Healthcare Exchange.”
TRUTH: That's true! Plans have to have a minimum standard of benefits, but can offer other plans as well. But that's fair, isn't it? Private insurers can continue to operate outside the exchange if they wish – should the government establish no standards for the exchange? In that case, how could reform end insurance industry abuses and help to control costs?
“Page 84: All private healthcare plans must participate in the Healthcare Exchange (i.e., total government control of private plans)”
TRUTH: This section says is that if private health care plans want to operate in the Exchange, they must provide a basic benefit package.
“Page 124: No company can sue the government for price-fixing. No 'judicial review' is permitted against the government monopoly. Put simply, private insurers will be crushed.”
TRUTH: This section describes rate-setting under the public health insurance plan option, which will compete with private insurers, who can set their own rates. Because of inherent advantages like their established administrative and provider frameworks, private insurance companies will not be “crushed” by government competition.
“Page 341: Government has authority to disqualify Medicare Advantage Plans, HMOs, etc.”
TRUTH: The government can disqualify some Medicare Advantage Plans from receiving some additional payments, but only if those plans are not meeting necessary requirements.
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