Wednesday, October 28, 2009

Figment and reality

Figment and Reality has commented on my earlier “Rape is a pre-existing condition” post. As so often seems to happen my response to him has grown to post length. I don’t disagree with what F&R has written - with one exception - so I suppose this is not technically a response to his comment. Rather his comment has provided a springboard for me to expand on some thoughts.

F&R writes:

If we follow the conclusion of the insurance company, it would be best if she bought the drugs on the black market to prevent being labelled with the pre-existing condition tag. Should she later discover she indeed contracted HIV, then since they did not know about it, they would be required to cover it. Instead, by being responsible, she is being penalized.

I agree wholeheartedly that this situation is - for both society and Susan - stupidly arranged. Obviously Susan should be able to take care of herself medically and clearly society is best served when people at risk of serious illnesses - particularly communicable ones - seek quick and aggressive treatment. The disconnect comes when people use this story to condemn the insurance industry. It is indeed in Susan’s best interest and in society’s best interest for Susan - anyone - to seek medical treatment without fear it will keep her from getting health insurance down the road. But by what logic is it an insurance company’s job to serve either Susan’s interest or that of society? Insurance companies are profit-making entities. They exist to serve their paying customers and - if they have them - their shareholders.

If society believes pre-existing conditions should never prevent someone from getting health insurance then society needs to assume the burden of making sure that happens. To force that burden onto private companies is stupid and short-sighted - unless the goal is to see the companies fail.

It is perfectly logical to use Susan’s case to demonstrate the need to rework our health care/insurance system so that pre-existing conditions do not prevent someone from obtaining health insurance and therefore top notch health care. However, to use Susan’s case to “prove” the insurance companies are the villains of health care or that the “bastards have brought [health insurance reform] upon themselves with their despicable practices” reflects either a total lack of understanding of the really rather simple realities of pre-existing conditions or a regrettable willingness to demonize an industry to achieve a political goal. Leaving aside the moral problems of demonizing companies - which are, after all, made up of living, breathing human beings just like you and me - the practical problem is that demonization does not lead us to figure out where the problems in the current system really lie. In fact, demonization virtually guarantees we will misidentify the problem; it is designed to do just that. And if we misidentify the problems we have virtually no hope of designing solutions which actually fix the problems.

F&R continues:

She had to go to a Doctor to get the prescription, he/she recommended the meds as Prophylactic care and she is now being told that her potential exposure is now a pre-existing condition and obviously did not have insurance at the time of the Rape.

Actually Susan did have health insurance at the time of the rape. The story specifically refers to her losing her health insurance and seeking new coverage. We don’t know why she lost her health insurance: she may have lost her job; she may have gotten insurance through her husband’s job and he lost his job or they were divorced; the premiums may have become too much for her to handle and she was looking for cheaper insurance; she may have had private insurance at the time of the rape and lost it when she moved to another State. All of which lead to Figment’s next point:

From what I read, the one very important part of any health plan discussion has to be true portability. With portability, pre-existing doesn't occur, as long as you don't have insurance lapses.

Yes, but. There is a problem with true portability for the insurance companies. JustOneMinute is suggesting a plan he calls “Once Covered, Always Covered”:

My Tough Love approach would be to rank insurance policies and legislate that anyone with, for example, a Class One coverage cannot be denied Class One coverage by another insurer at prevailing rates. In other words, people only have to pass through the door once; after that first insurance company covers them, they can buy coverage for life. People who take their chances and don't buy insurance when they are young face the risk of getting the Tough Love message (which will be as tough as that faced by the current uninsured, namely, emergency room and clinic care.)

This sounds very fair to those of us who buy health insurance: if we’ve faithfully paid premiums for years why should we be denied coverage for a “pre-existing” condition just because we now want to - or need to - buy insurance from a different company? That condition didn’t exist previous to our ever buying insurance; it just exists previous to our buying this particular health insurance. And that, of course, is the sticking point. If I’ve paid premiums for years to, say, United Health Care and now I’ve got diabetes why should Blue Cross Blue Shield have to cover me? It’s UHC that got all those premiums for all those years when I was perfectly healthy; why must BCBS take me on knowing my premiums couldn’t possible cover what I’ll cost them? Insurance companies are not fungible.

The counter-argument would be, I suppose, that this will all even out. But it won’t. I can easily envision a situation in which ABC Insurance has really low premiums but achieves that by paying health care providers as little as possible (resulting in very few who take their insurance) and by denying as many claims as possible. Meanwhile XYZ Insurance charges substantially higher premiums but pays health care providers very well (and has a huge network) and processes claims fairly. Why wouldn’t I enroll with ABC Insurance as long as I was well and switch to XYZ Insurance if I ever became seriously ill?

A similar situation arises if I live most of my life in a relatively poor State with relatively unsophisticated medical care. My insurance premiums are low. Then I become seriously ill; let’s say I have cancer. Now I move to New York or New Jersey to be near the world-class medical care available there; my insurance premiums are high. Why do the New Jersey insurance companies have to take me on? They haven’t seen a dime from me for 40 years and I’m going to cost them a fortune.

We can get around this, of course. We can write government regulations that make sure JOM’s Class One designation not only includes what a policy covers but also takes into account reimbursement rates and how many providers are in a network and the percentage of claims paid and whatever else an insurance company can do to make its policies more or less desirable plus some kind of weighting by State. (We have now re-invented the Bronze, Silver, Gold, Platinum designation in the proposed “Exchange” - which was itself a re-invention of the Federal Employee Health Benefits Plan. She nagged.) We could require an insurance company to cough up some money when one of their policy holders switches to another company: prorate it based on years covered or something like that. Of course both of these ideas mean Yet More Government MicroManagement and so we’ve circled back around to something I’ve said before: if insurance companies are going to become public utilities we might be better off just going with a straight government program. It removes a layer of bureaucracy and cost and it puts government on the firing line rather than letting it blame all the intractable problems of health insurance on those horrible insurance companies.

F&R points out:

That was the intent of COBRA but it does not work as applied when the premiums under COBRA exceed your unemployment check.

Yes, COBRA is an idea that resulted from an attempt to do good without being willing to ante up any money.

Finally, the part of F&R’s comment that I do disagree with:

As far as the media playing to their audience, what else can we expect? They are rewarded financially by having larger audiences and our world runs on money. The headline caught me, just like the rest of us in this blog. If they (or you) had changed the title, few would listen or read about it. There is truth to the theory that "if it bleeds, it leads" in the newroom. Profits are what keep the news companies running but it is unfortunate that opionions get confused with real news.

I can buy that argument for newspapers and television which must capture readers to sell advertisements to stay in business. I don’t like it but I can buy it. I can’t buy it for your basic blogger who is - I assume - blogging in an attempt to add value to the very serious discussion we should be having about how our current health system functions, what causes the problems we see in it, and what we can do to fix those problems. I first found this story - and headline - at a blog that has done some helpful writing on cost shifting and malpractice - including an objection to Ezra Klein’s “Pollyanna-ish belief that ‘if doctors were just better, we wouldn't have these lawsuits’” because it “betrays a lack of real-world experience actually delivering health care.” I expect more from such a thoughtful blog than “if health insurance companies weren’t such bastards, we wouldn’t have a problem with pre-existing conditions like Susan’s.”



Megan McArdle is explaining how the public option can drive reimbursements for health providers below sustainability. (I discussed this problem here although McArdle is of course doing so much more pithily.) McArdle is also wondering how health care providers will react to health reform that will be bad for their reimbursement rates.

I’ve recommended David Mamet’s piece before but I think it’s worth re-reading in the context of demonizing insurance companies.


Figment and Reality said...

The only part that disagree with is where you say

"This sounds very fair to those of us who buy health insurance: if we’ve faithfully paid premiums for years why should we be denied coverage for a “pre-existing” condition just because we now want to - or need to - buy insurance from a different company? That condition didn’t exist previous to our ever buying insurance; it just exists previous to our buying this particular health insurance."

Since I have had insurance through a variety of insurers I always thought that if you don't let insurance lapse, they MUST cover you as long as you are part of a group that has coverage.

For example, I had surgery recently for a condition I have had for a decade. I have had four different policies during that time and only the last one paid the price. There wasn't a question about them covering it and I thought that part of the reason is that I have had continuous coverage, albeit through multiple policies.

I think my statement about not letting insurance lapse is important The intent of COBRA and HIPAA is to ensure that you were covered during bridge time periods and that upon joining a new policy, you were automatically covered without pre-existing conditions. If your new policy did not cover a procedure that the old one did cover, or vice versa, then you are stuck. But then, that may prove my naivete.

I did find a link in "How stuff works" that seems to confirm that HIPAA and COBRA prevent the exclusionary pre-existing condition. According using COBRA or swapping from one plan to another means they cannot exclude you as long as you had insurance previously and the lapse did not exceed 63 +/- days. If I read it right, for pre-existing to apply, she must have had a lapse beyond the allowable time and/or her previous insurance time did not cover the exclusionary time period of 12 to 18 months. In any case, you have to be a HIPAA lawyer to read this stuff directly on the federal HIPAA website

If COBRA and HIPAA worked properly and were not so costly to the long term unemployed, then the system can work for those that avoid lapses. It sure gives a strong incentive to get back to work.

It is impossible to know how this applies to the case at hand but today's reality concerning HIPAA and COBRA says, "don't ever let insurance lapse".

Elise said...

F&R - True for group policies. Not true for individual policies which is what I have. I'm lucky in that NJ requires insurance companies to sell to individuals using the same rules you describe: creditable coverage must carry over to individual purchasers. So because I had group health insurance when I worked and COBRAed it for as long as possible I could purchase an individual policy with no pre-existing conditions exclusion.

However this is not the case in all States. A few years ago I considered moving from New Jersey to another State. I called the Blue Cross Blue Shield in the new State, explained that I had had continuous health insurance coverage since Moses was a pup, and was told that they would sell me a policy but it would have a one-year pre-existing conditions exclusion attached.

Based on the HowStuffWorks link you provided - very helpful, BTW - HIPAA deals only with group policies. I think this makes sense in light of my examples. If we're talking about *group* health insurance then we pretty much eliminate the problem of a single individual deliberately buying cheap insurance while healthy then seeking out expensive insurance when she gets sick. Without that problem the problem probably does even out. The insurer who got stuck with your surgery bill when you switched to it probably had at least one policyholder who had surgery immediately after switching from it.

I agree not letting coverage lapse is very important but I think the financial problems for insurance companies of treating them as fungible in the individual market are - like so many other problems in health insurance - intractable.

Elise said...

I actually have more to say about this - specifically the relationship between government and corporations - but I have to run an errand and get back before the neighborhood is infested with sugar-hungry phantasms. Later.

Elise said...

And yet another post - "Disputing with Taraka" - is up to discuss the relationship between government and corporations.

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