Wednesday, February 17, 2010

The Reality of Health Insurance in the Individual Market: Even State Programs Are Increasing Rates

The Disease Management Care Blog doesn't much care for drama that pits white hats against black hats. Novels, plays or movies that portray triumph and tragedy despite our very human flaws are the ones that have staying power because they give us insights about ourselves. Franny's borderline mawkishness, Hamlet's dithering and even Hans Solo's mercenary swagger are the ingredients that can distinguish the serious from the superficial plots. These are the stories that tell us about the human condition and how we deal with our grey world.

Contrast that with other vacuous fictions, like each of us has a marketable talent awaiting discovery by Idol, adolescent vampires routinely sport 6-pack abs and that stand-alone health insurers exist only make huge profits at the expense of the little guy. These simple plot-lines provide a nice fix in a culture addicted to superficial explanations, but little else. What's next, that all that's needed to be President is common sense and conservative values?

Anthem and other health insurers were pilloried ('screw its customers,' or 'defiant and unapologetic') for passing its increases in overall health care costs in a changing book of business to their individual market customers. Yet, for a grey-world reality check, take a look at this report about Pennsylvania's adultBasic program. Run by Pennsylvania's Insurance Department using funds received from the National Tobacco Settlement and through 'voluntary' contributions from the State's 'Blues' plan, it serves as the health insurance program 'of last resort' for indigent individuals unable to obtain insurance elsewhere. Currently, there are just over 40,000 enrollees who pay a subsidized premium of $35 a month, but, due to lack of funding, there is a waiting list of approximately 3500 qualified individuals who pay the full premium of about $330 a month.

Well, thanks to 'sharply rising costs,' persons on the waiting list will see their preimum double to $600 a month. For those already in the adultBasic program, their monthly premium will go up by $1 to $36, but office visit as well as emergency room co-pays are doubling and other services will now have a 10% co-insurance. The reason for these increases in a group least able to afford it isn't because this health insurance program is putting profits before patients, but because:

'...general “medical” inflation: medical appointments and procedures simply cost more than they used to. Another major reason for ... cost increases is that everyone who accesses the benefit package tends to use medical services at a level much higher than in the commercial market. Because of these factors (general medical inflation plus significantly higher usage), the rates needed to be increased substantially to allow the program to continue covering as many people as possible.'

Of course, upon further quiet reflection, smarter folks recognize that it's not the insurers' 'fault,' but a business model that even Republicans agree is broken. Yet like any good storyline, flawed fixes abound: individual mandates to increase the risk pools seem politically unpalatable and do little about the underlying rising frequency and severity of claims expense, while tax breaks and cross border sales could result in a race to the bottom for even fewer people who choose to buy insurance.

This is not easy stuff. Superficial storytelling may make for heros and villains from either end of the political spectrum, but our flaws and the greyness of reality is far different.

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