A “a new and solid floor in the provision of health care”?

Last updated on: November 12, 2013 at 9:35 pm by Jane the Actuary

A “a new and solid floor in the provision of health care”? 2013-11-12T21:35:00-06:00 Jane the Actuary

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That’s what Eric Zorn, the Chicago Tribune columnist, is writing about in his blog today: the notion that the GOP is “stuck” with ObamaCare because a true attempt at repeal will take away provisions that Americans like, as well as the buggy exchanges:

the ability of children up to age 26 to stay on their parents’ policies, the expansion of Medicaid to larger segments of the working poor, the end of the ability of insurance companies to take away coverage or declare lifetime reimbursement limits.

So let’s dismantle this piece-by-piece (since you’re all rather tired by now of my little essays on fatherless children).

The ability of children up to age 26 to stay on their parents’ policies? This is always cited as if, by some magic, it’s free health insurance, but, of course, there’s no reason why a 25-year-old “child” is any cheaper to insure as a dependent than as an independent young person. (Maybe there’s some reason why the administative costs are cheaper, in which case I don’t see why an insurer would have any problem with a “family plan”.) But most of the time, this is a “freebie” only in that employers haven’t responded by changing their contribution structure so that rates vary based on the size of the family, but maintain their same ee, ee + spouse, ee + family structure, which means that the “free” young adults are paid for by the company’s workforce as part of the overall premium and, to the extent to which the employer’s subsidy covers this, by lost pay raises (because pay and benefits are all a part of the same total compensation budget).

Besides which, I just find it creepy and infantalizing to refer to “children up to the age of 26.” Yes, I know, we’ve extended adolescence in so many other ways — education extending through graduate school, or young adults continuing to be supported by their parents as they work at unpaid internships, ever-increasing (in recent times, anyway) numbers of young people living at home rather than getting an apartment, delayed marriage, etc. But the fact that this is now a part of our vocabulary, these 26-year-old children, is unsettling, and I’d be perfectly happy to get rid of this — neither to stand in the way of any employers or insurance providers who want to offer a “family plan” (any more than there’s anything wrong with a T-mobile Family Plan), and even allow employers to provide the benefit tax-effecively, nor to mandate any specific age up to which coverage must be continued.

The expansion of Medicaid? That’s it’s own separate question; the Medicaid issue is, to a fair degree, rather removed from the remainder of ObamaCare — since states have made individual decisions on whether to expand eligibility (and had previously had made individual decisions on how generous Medicaid should be in the first place). It’s somewhat arbitrary whether Medicaid is provided up to 100% of poverty level or 133% or some other number, just as the poverty level figures themselves are arbitrary, as well as the fact that low-income cohabitors do much better than married couples because of the nature of how a “household” is defined.

The end of the ability of insurance companies to take away coverage? Last I knew, the requirement that an insurer not rescind coverage upon a patient becoming ill, is not an ObamaCare provision but a longstanding issue. What’s new, of course, is the “no-pre-existing-condition” requirement — and here, really, the best way to avoid gaming the system would have been a mix of (what I believe Romney had proposed in his campaign materials) protection against pre-existing condition exclusions as long as you remain continuously insured (via employer-sponsored or private insurance — HIPAA had gone part of the way there but there were still gaps) and a one-time “pre-existing condition amnesty.” The very fact that the insurers are required to cover the already-sick at the same rates as the well is what produced the whole Rube Goldberg contraption with the mandates and other elements and the refrain that “it’s so carefully constructed that if you remove one element, it falls apart” — not a very robust design.

For that matter, if we had had a fully-individual market, there likely would have been some market response to this already — insurers offering “future pre-existing condition” protection as an add-on to standard health insurance policies.

The elimination of lifetime benefit maximums? Actually, states have always had it in their power to regulate insurance (like Dorothy’s ruby slippers), and nothing ever prevented them from requiring unlimited benefits, in the same way as Illinois has passed laws requiring IVF coverage, among other things.

The bigger issue — and one that I’ve not yet seen addressed with careful attention to fact — is exactly what the cause is of the massive benefit increases that people are experiencing. I don’t think that the throwaway line of “they had junk plans that hardly qualify as real insurance” is true for most of these people; those who had the so-called “mini-med” plans knew it. My impression is that what these plans were missing were things like the prescription drug coverage, the extensive coverage of “preventive” treatments, the line items of maternity benefits and pediatric dental, even if the policy was for an adult male, and the like. It’s also not clear to me to what degree the prices skyrocketed because of the new coverage provisions, and to what extent the mandatory cross-subsidies (men subsidizing women, the young subsidizing the old, and most of all the well subsidizing the sick) as well as insurers’ expectations of disproportionate numbers of subsidy-takers, are the driving force, which is just occurring simultaneous to everyone in the individual market being obliged to change plans to a “compliant” plan and discovering the costs are now sky-high — in which case, the “if you like your plan, you can keep it” line is completely irrelevant; even if plans had nominally remained unchanged and thus “kept,” prices would still increase.

But Zorn is right in one respect: the key element of ObamaCare is the subsidies, and ObamaCare has established a baseline which provides individuals subsidies to fund the purchase of health insurance. (The formulas are lousy — with major “marriage penalties” and cliffs that act as strong incentives to understate your income, but it’s a new baseline expectation nonetheless.) Any alternative which does not include monetary assistance towards the purchase of health insurance will not see the light of day.

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