Sunday, September 28, 2014

Having some health insurance is better than having none. But American insurance...

Those of us engaged in the long struggle to pass and implement the ACA have (not wrongly) fixated on how vital it is to have health insurance, and we've been cheered by the roughly 25% reduction in the nation's uninsured in the ACA's first year. We've also celebrated the ACA's ending of arbitrary policy rescissions, yearly and lifetime coverage caps, medical underwriting, and plans lacking essential benefits like childbirth and drug treatment.

Some coverage is better than none. But recent good reporting is also highlighting the extent to which much if not most health insurance in America remains inadequate, exposing plan holders to sometimes substantial, sometimes damaging and sometimes ruinous costs. The incidence of such exposure may be rising rather than falling, as employers continue to offload the cost of care onto employees.
Exhibit A is Elisabeth Rosenthal's peerless Paying Till it Hurts series in the New York Times. The latest installment exposes many hospitals as free-fire billing zones, in which a wide cast of roving medical actors can insinuate themselves into an (often insensate) patient's care and add their services to the tab, whether they're in the patient's provider network or not.

Exhibit B is from a new Kaiser Health News/NPR report by Jay Hancock: It seems that some employers with self-funded health plans are purporting to meet the ACA's 60% actuarial value standard while cutting out hospital care. That is, they're taking up plans that claim to meet 60% of the average patient's yearly healthcare costs -- the actuarial value -- while omitting the relatively rare hospital coverage -- gaming the "average" that defines the actuarial value.

Exhibit C is a Modern Healthcare story by Virgil Dickson highlighting low income buyers of plans from the ACA's cheapest "bronze" tier who still need charity care because the bronze plans' high deductibles (averaging $5k per person) leave them effectively without insurance except in case of catastrophe. As I've noted, the good news is that bronze plans were a relatively rare choice among the subsidy-eligible, particularly those on the lower end of the income scale.  But there are still more than a million Americans in these rather ridiculously high deductible plans. And deductibles keep rising in employer sponsored plans as well.

The takeaway, in my view, is not that private insurance itself is inherently dysfunctional, but that U.S. insurers remain divided and weak in their constant billing war with providers. There's lots of countries with successful healthcare delivery filtered through private insurers, but all of them except the U.S. impose uniformity on billing rates, whether through government imposed fee schedules or "all-payer" collective negotiation by insurers overseen by government.

In the U.S., we've collectively put ourselves in hoc to hospitals, physician practices and drug companies. This is the ACA's preexisting condition, which the law attacks only via indirection and selective nibbles -- pilot programs in coordinated care and pay-for-performance (which I suspect the providers will learn to game), competition among insurers, the Cadillac tax on expensive plans. That is, by pressuring insurers and patients while testing new incentives for providers.

Some of these measures may prove at least somewhat effective, and a functional Congress could build on those that work, as can HHS. But we don't have a functional Congress.  As a result, to the extent we control costs, we'll probably continue to do so by mainly by making care selectively unaffordable. That's okay when we're talking wasteful care, or overpriced care when there's clear alternatives. But such rational restraints on usage probably make up a small part of inadequately insured patients' inhibitions.

UPDATE, 9/29: For your invigorating Monday morning blood-boil, Elisabeth Rosenthal has a fresh horror story (meticulously documented as always): When the ER is in network but the doctors are not. Business as usual at some hospitals using contract ER doctors.

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