4 September 2010 | admin
A newly published study by Health Affairs finds that one fifth of the 25 million children who are eligible to receive free or low-cost, government-subsidized health insurance are not participating in the available programs.
Nationwide, 82% of eligible children are enrolled in taxpayer-subsidized health care insurance programs, but about 18%–a total of 5 million kids—are not.
Kathleen Sebelius, the Secretary of Health and Human Services called a press conference to challenge the states, which are responsible for implementing the federal programs such as Medicaid or Children’s Health Insurance Program, to do a better job. “The study confirms that a lot of states do a very good job,” said Secretary Sibelius. “But the study also gives us a much sharper focus on where kids are who need coverage.”
The states doing the best job of enrolling eligible children are concentrated in the East, especially the Northeast. The leading states are Maine, with 92% participation; Vermont, with 94% participation; and Massachusetts, with fully 95% participation. Of course, Massachusetts famously has had a statewide health care insurance program in place for about five years.
The states with the lowest participation are in the West, including Nevada, with only 55% participation; Utah, with 66% participation; Colorado, with 68% participation; and Montana, with 69%. Only one other state had less than 70% participation: Florida, with 69%.
The researchers behind the study expressed surprise that low-income children were much more likely to be enrolled in such programs than higher-income children were. The lowest participation in the programs came from families earning more than $88,000 a year, or twice the federal poverty rate $44,100 for a 4-person family.
These findings did not surprise me, however. I have found that families that can afford private health insurance often do not want to split the family between two plans, even if their children are eligible. In addition, many higher income families assume they are not eligible for programs, which they believe are for “the poor.” Even when they learn about their eligibility, some families balk at taking advantage of the government programs, either because of a social stigma attached to receiving government assistance or because they take pride in paying their own way.
24 August 2010 | admin
Health Insurance Commissioners Classify Loss Ratios
An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.
The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.
The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.
The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.
The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”
Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.
An association of health insurance regulators tasked by Congress with defining what types of spending by health insurance companies constitute patient care came to an agreement on Tuesday regarding allowable spending.
The National Association of Insurance Commissioners voted overwhelmingly to adopt restrictive definitions of patient care.
The NAIC’s action has far-reaching consequences, because the Patient Protection and Affordable Care Act, the national health care insurance reform legislation signed into law in March by President Obama, mandates that health insurance companies must spend 85 percent of the premiums they collect from large group plans and 80 percent of premiums from small group plans and individual insurance directly on patient care. These percentages are known as the “loss ratio” of health insurance plans.
The insurance industry lobbied for a broad interpretation of patient care that included programs for improving communications between medical facilities, wellness incentives, and detection of redundant testing and fraud, all of which have a positive impact an patient care.
The insurance commissioners rejected the health insurance industry’s suggestions, leading patient advocacy groups to celebrate. “Today the NAIC took a step toward ending the health insurance companies’ stranglehold on our health care,” exulted Ethan Rome, executive director of Health Care for America Now. “The top state insurance regulators from across the nation voted to put patient care above insurance company profits.”
Karen Ignagni, president and CEO of America's Health Insurance Plans
Insurance industry professionals worried that the strict definitions will hurt patients in the long run. Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that the NAIC’s narrow interpretation of patient care “could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud.” By forcing private health insurance companies to absorb the cost of wellness incentives, fraud detection, and other programs, the NAIC is constraining innovation, argues Ignagni. “Preserving patients’ access to high-quality health care services is essential if the key goals of health care reform are to be achieved,” she says.
4 August 2010 | admin
Your doctor’s office most likely offers discounts on medical care—all you have to do is ask.
Since many of today’s health insurance consumers have raised their deductibles to keep their premiums low, more people find themselves paying large out-of-pocket medical expenses than ever before. The federal government’s Centers for Disease Control and Prevention states that 20% of American consumers with group health insurance through their employers are in a high-deductible plan, with deductibles of $1,200 for individual coverage and $2,400 for family coverage. That percentage jumps to 47% among those with individual health care insurance coverage.
You don’t have to have a high-deductible health care insurance plan to feel the bite of out-of-pocket expenses. For example, an annual check-up that costs $350 likely will come in lower than the average annual deductible. Do not assume that you have to pay the full amount, however. Before the physical begins, confirm with your doctor that all the tests are absolutely necessary. Many doctors are practicing defensive medicine and do not realize that you will be paying out of pocket. Once they are aware of your situation, they might be able to eliminate one or two routine tests, shaving more than $100 off your bill.
Here are a few other ideas for saving on out-of-pocket medical expenses:
Cash Is King
Cash saves time, and time is money; so many doctor’s offices give discounts when you pay cash. “Some healthcare providers give anywhere from 10 percent to 60 percent off for paying cash,” reports Carrie McLean, a consumer expert with eHealthInsurance.com, an online health insurance broker. “It saves them time in having to bill you or set up a payment plan.”
Take an Interest Your Treatment and Tests
According to the Dartmouth Atlas Project, up to 30% of all medical treatments are not necessary. One reason for the waste: duplication of tests and procedures because of poor communication between physicians. Patients can eliminate the problem by taking a greater interest in their treatments and tests and bringing attention to tests that are being duplicated.
Shop Around
Just because your doctor recommends a test or care at a specific location it does not mean you have to go there. You can call around to find a lower price. Various providers charge various rates, often depending on their size. Larger institutions, such as hospitals, have more negotiating clout, and often are able to obtain higher prices from insurance companies. Smaller offices, such as ambulatory care centers, often charge less.
Compare Apples to Apples
Every procedure and test has a common procedural terminology (CPT) code that is used by health care providers to bill Medicare and health insurance companies. Find out the CPT for the test or procedure you need, and ask for pricing based on that code. That way you can compare apples to apples.
Get It In Writing
If you successfully negotiate a lower price with a healthcare provider, be sure to have them give it to you in writing. Because of time delays in appointments and the large number of people who go through every office, you cannot depend on office staff to remember your individual agreement. In addition, the majority of healthcare providers contract with a medical billing company that will not be aware of your agreement. Having the pricing documented will make it easier to correct any errors that might arise.
20 July 2010 | admin
In my last post, I discussed California’s response to the federal mandate to create a high-risk health insurance pool for people who have been denied private health insurance due to preexisting medical conditions.
While researching that post, I went to the federal government’s health care insurance Web portal at http://www.healthcare.gov and followed the links to the California site. I clicked the link to receive an email about applying for the high-risk health insurance pool. Today I received an email response from the state of California:
Hello:
Thank you for your interest in California’s Pre-existing Conditions Insurance Plan (PCIP), also known as the temporary federal high risk pool. Currently, we do not have applications available for the PCIP. The Managed Risk Medical Insurance Board (MRMIB) continues discussions on the specific rules for developing, implementing and operating the PCIP.
California’s goal for implementing the PCIP is to begin accepting applications in August 2010 with the first effective date of coverage beginning in September 2010.
To be eligible for the new PCIP, federal law sets out three requirements:
1. Be a US Citizen, US National or lawfully present individual;
2. Have a pre-existing medical condition that meets the guidelines set by the federal government; and
3. Have not had health insurance or public health coverage for at least six (6) months.
Applicants must have been uninsured for at least six months at the time they apply for the PCIP but the State high risk pool does not have such a requirement. You can access info on the CA Major Risk Medical Insurance Program at http://www.mrmib.ca.gov/MRMIB/MRMIP.shtml.
If you have included your name, address, telephone number, and email address, we will place your name on the list for a PCIP application when they are available in the next month or so. If you have not included this information, please re-submit your request with that information.
We will be posting updates on MRMIB’s website under “What’s New” on the homepage at http://www.mrmib.ca.gov/. Also, if you know others who want a PCIP application ask them to send us an email with their name, address, telephone number and email address to FHRP@mrmib.ca.gov.
Again, thank you for your interest in California’s PCIP.
I hope this helps anyone who has been denied coverage due to preexisting medical conditions.
15 July 2010 | admin
On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act—the national health insurance reform legislation—into law. The PPACA contains a provision requiring the federal government to establish a temporary high-risk health insurance pool no later than 90 days after the bill was signed to insure people who have been denied coverage because of preexisting conditions.
This high-risk pool will last only until December 31, 2013. Beginning January 1, 2014, all health insurance providers will be required to cover preexisting conditions. (To see what I think the long-term effects of this provision will be, please see my previous posts.) In the mean time, Kathleen Sebelius, Secretary of the Department of Health and Human Services (DHHS) sent a letter to the governors of the fifty states, asking how each state will administer the temporary high-risk pool. Health care insurance consumers who have been denied coverage for preexisting conditions can begin to enroll in new “high-risk” health insurance pools administered by the Department of Health and Human Services.
On April 29, 2010, Governor Arnold Schwarzenegger indicated that California would contract with the federal government to operate a temporary health insurance program of currently uninsured individuals with preexisting medical conditions. The governor stated that California would operate the temporary high risk pool alongside the state’s high risk pool, the Major Risk Medical Insurance Program (MRMIB), using the same operational framework. The MRMIB is a public-private partnership that uses contracted vendors monitored by the MRMIB to provide health insurance coverage through a variety of programs, including California’s Health Insurance Program (CHIP), also known as the Healthy Families Program.
The eligibility criteria for the temporary high-risk plans will be different than those for existing programs. Here is an overview of the temporary high-risk insurance program:
Who is eligible? Eligibility is limited to American citizens or legal residents who have not had health insurance for at least six months because they were denied coverage because of a pre-existing medical condition. You will need a letter from a private health insurance provider stating that you were denied coverage altogether or for a specific condition.
How much will health insurance from the high-risk pool cost?
California has yet to choose the vendor whose plan will be implemented, but even with the federal subsidy premiums are expected to range from $400 to $1,200 per month, depending on factors such as age and gender. As with typical plans, the high-risk policies will have annual deductibles that could range as high as $3000 for individuals and $6000 for families.
Can the states afford to cover everyone?
The Congressional Budget Office (CBO) estimates that the PPACA will cost taxpayers $1.05 trillion over the first 10 years, but less than one-half of one percent of that—a mere $5 billion—has been set aside to fund the high-risk pools. The CBO estimates that the program will run out of funds in two years, depending on demand. The Department of Health and Human Services has the ability to move money from states that do not use all of their allocated funds to those states that need more, but right now the Obama administration has no plans to seek additional funding for the high-risk program.
How do I sign up?
Those who have been denied coverage because of preexisting conditions should visit the federal government’s health insurance Web portal at http://www.healthcare.gov. This site offers an online form that leads to links for application information specific for each state.
30 June 2010 | admin
As predicted in my preceding post, the U.S. Congress passed and President Obama signed into law an amendment to the federal health insurance overhaul bill that halts the mandatory 21 percent reduction in the fees paid by Medicare to physicians who provide care to Medicare patients. Both parties supported the “doc fix” as the legislation is known: the Senate passed the bill on a voice vote and the House voted 471 to 1 to pass the bill. The law is retroactive to June 1, ensuring that there will be no disruption in payment amounts.
This was the tenth occasion in the past eight years that Congress has stepped in to prevent the payment reductions scheduled in 1997. Like the preceding measures, this is a stop-gap fix, preserving the health care insurance payment amounts only through the end of November. Unless another doc fix is passed, Medicare physician payments will automatically be cut by 23% in December and another 7% in January 2011.
Although the need for long-term reform is obvious, Congress was reluctant to permanently modify the calculation of Medicare payments to doctors. President Obama expressed frustration with the temporary doctor fix. “Kicking these cuts down the road just isn’t an adequate solution to the problem,” declared Obama. Nancy Pelosi, the Speaker of the House, agreed, criticizing the bill as “totally inadequate.”
The reason Congress did not address the long-term structural problem of Medicare payments is simple: It does not want to add to the unprecedented deficits it has already created through the unfunded economic stimulus package and the healthcare reform package that the Congressional Budget Office (CBO) has recently admitted is underfunded by $127 billion. Last year, the CBO estimated that a permanent fix of physician payments would cost $245 billion over ten years. With voters exasperated by deficit spending, Congress was in no position to add to the deficit in an election year. Instead, congressional leaders postponed long-term action until after the November elections and actually raised taxes and cut Medicare payments to hospitals to offset the cost of the stop-gap measure.
18 June 2010 | admin
In my prior post, I talked about the two upward revisions the Congressional Budget Office (CBO) made in its estimate of the cost of the Patient Protection and Affordable Care Act—the health insurance reform bill passed by Congress and signed by President Obama. Now, the chief executive is asking Congress to spend even more on healthcare programs.
In his weekly radio address to the nation, President Obama urged Congress to remove the automatic cuts in the Medicare Part B payments to physicians scheduled to go into effect this month.
The scheduled reductions in Medicare Part B payments were part of a legislative packaged Congress passed in 1997 to help slow the growth of the taxpayer funded health care insurance program for seniors. Congress linked physician payments to the Sustainable Growth Rate (SGR), an index that has lagged behind the increasing Gross Domestic Product (GDP). Because of this lag, sustainable “growth” actually amounts to reductions in physician payments. Presidents and the Congress have stepped in before to prevent the called-for reductions in Medicare payments, as the CBO noted in its analysis of the overall cost of the healthcare reform proposals:
The sustainable growth rate mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments, and legislation to do so again is currently under consideration by the Congress.
To attract the support of the medical establishment for comprehensive healthcare reform, the Democratic majority said it would include a permanent change to Medicare Part B payments as part of the legislation. The Democratic leadership dropped the idea of a permanent “doc fix” when the CBO reported it would add $245 billion to the cost of the legislation over ten years, resulting “in a net increase in the federal budget deficit of $239 billion over the 2010-2019 period.” Adding to the federal deficit would endanger passage of the controversial bill and violate a pledge President Obama made to the nation on September 2009:
I will not sign a plan that adds one dime to our deficits—either now or in the future. (Applause.) I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.
[My emphasis.]
To maintain support for the bill from the American Medical Association and other groups, congressional Democrats promised to eliminate the Medicare payment cuts in separate legislation, creating the appearance that the comprehensive healthcare overhaul was paid for by the $420 billion in new taxes and more than $500 billion in Medicare cuts.
As it turned out, the Patient Protection and Affordable Care Act ending up adding more than a dime to the deficits after all, according to the Congressional Budget Office. In March, the CBO added $152 billion to its estimate of the cost of the healthcare bill, wiping out the $140 billion in deficit reductions it had originally forecast and adding $12 billion to the federal deficit. Then, as I discussed in my last post, in May the CBO revised its calculations again, stating that start-up costs for the various bureaucracies called for in the legislation would cost another $115 billion, bringing the deficit to $127 billion. Putting the $245 billion “doc fix” back into federal healthcare budget, would bring the total deficit for healthcare spending to $372 billion.
President Obama has not indicated what he plans to cut to avoid adding 3.7 trillion dimes to our deficits.
21 May 2010 | admin
Before the U.S. Congress used parliamentary maneuvers to send the Patient Protection and Affordable Care Act (PPACA) to President Obama for his signature, Representative Jerry Lewis of California asked the Congressional Budget Office, the agency charged with analyzing congressional budgets, for an estimate on the cost of implementing the PPACA. Congressman Lewis did not receive a reply until after the PPACA became law. What the CBO admitted in a letter to Lewis last week is that the cost of the health insurance reform has ballooned by 25 percent since it was passed.
While the bill was still under debate, the Congressional Budget Office (CBO) estimated that the reforms would cost taxpayers $788 billion dollars during the first 10 years of implementation. Many critics of the bill doubted the accuracy of the CBO’s analysis. Some wondered aloud if the officials at the CBO were low-balling the figure to keep it below the politically unsavory price tag of $1 trillion.
A few days after the president signed the health care insurance reforms into law, the CBO confirmed the fears of the bill’s critics. The congressional budgeting analysts revised their estimate of the cost of the health insurance overhaul upward, from $788 billion to a whopping $940 billion.
The March revision still did not include the areas Representative Lewis, a leading Republican on the Appropriations Committee of the House of Representatives, asked about. According to the letter sent to Lewis by CBO Director Douglas W. Elmendorf, the cost of the bill is actually another $115 billion higher than the March estimate. The new price tag for the whole program stands at $1.05 trillion for the first ten years.
Taxpayers will share the cost of the health insurance unevenly, according to the taxation schemes set forth in the bill. But if everyone shared the $1.05 trillion cost equally, that add a tax burden of $3200 to every man, woman, and child in the country—or roughly $13,000 for a family of four. That is the cost in new taxes, in addition to what the family might otherwise owe. Keep in mind, those taxes do not pay for health insurance. You still have to pay your private health care insurance premiums. In fact, the new law mandates that you do.
The tax burden could even go higher, according Director Elmendorf. He wrote to Lewis:
CBO does not have a comprehensive estimate of all of the potential discretionary costs associated with PPACA, but we can provide information on the major components of such costs. Those discretionary costs fall into three general categories:
• The costs that will be incurred by federal agencies to implement the new policies established by PPACA, such as administrative expenses for the Department of Health and Human Services (HHS) and the Internal Revenue Service for carrying out key requirements of the legislation.
• Explicit authorizations for a variety of grant and other program spending for which specified funding levels for one or more years are provided in the act. (Such cases include provisions where a specified funding level is authorized for an initial year along with the authorization of such sums as may be necessary for continued funding in subsequent years.)
• Explicit authorizations for a variety of grant and other program spending for which no specific funding levels are identified in the legislation. That type of provision generally includes legislative language that authorizes the appropriation of “such sums as may be necessary,” often for a particular period of time.
CBO estimates that total authorized costs in the first two categories probably exceed $115 billion over the 2010-2019 period, as detailed below. We do not have an estimate of the potential costs of authorizations in the third category.
[Emphasis mine.]
According to the CBO, Congress has carte blanche to raise whatever sums are necessary to fund special grants and programs related to health insurance reform. One does not have to be a budget analyst to foresee that the health insurance overhaul once described by proponents as costing less than a trillion dollars over ten years will skyrocket beyond its current price of $1.05 trillion.
Imagine if I ran my business like that, furnishing you with a quote for health insurance premiums that you would build into your family budget, but adding that I reserved the right to increase premiums “as necessary” for whatever reasons I wanted. I can assure you that one hundred percent of my clients would take their business elsewhere.
Unfortunately, we taxpayers do not have that option.
12 May 2010 | admin
I interviewed a highly respected doctor and clinical professor of medicine at a major university about health insurance reform. His perspective was interesting.
Q. What is your opinion of the health insurance reform bill signed into law earlier this year?
A. It was a botched effort—a toxic brew of costly mandates and weak measures to control costs.
Q. Should it be repealed?
A. No, it should be changed, not discarded. Health care insurance reform is critical to the health of the nation, to its survival.
Q. What do you mean?
A. The current healthcare system—even with the new reforms—is unsustainable. We must bend the cost curve, or the country will go bankrupt. The total amount spent on health care in the United States, the National Health Expenditure (NHE) was just 7.2% of the gross domestic product (GDP) in 1970. By 2005, the NHE represented 16%. Unless more is done, the NHE will be up to 19.5% of GDP by just 2016. The trajectory is unsustainable. Healthcare is bankrupting American families. Health-related bankruptcies made up just 8% of the total bankruptcies in 1981, according to a study by Himmelstein and colleagues. By 2001, the number had climbed to 46.2% of all bankruptcies. In 2007, medical-related bankruptcies made up almost two thirds—62.1%—of all bankruptcies.
Q. Where did health insurance reform fall short?
A. It emphasized coverage rather than the original goal of cost containment. For example, it did nothing to reform medical malpractice lawsuits, therefore medical malpractice insurance will remain high. Independent estimates show that tort reform alone would reduce the NHE by 20 to 25%. Yet, when the president spoke to the American Medical Association in June 2009, he declared that tort reform would not be part of the reforms.
Q. Did Republicans do the right thing in opposing reform law?
A. No. They should have worked with the Democrats to make the changes needed for a sustainable system. Instead, they talked about the rationing of healthcare and death panels that would decide who lived and who died at the end of life. They should have admitted that we already have “soft” rationing of health care. They helped perpetuate the myth that everyone can receive every kind of care at every stage of life. That simply is not feasible.
27 April 2010 | admin
Louis D. Brandeis, an associate justice of the U.S. Supreme Court, once theorized that the various states in the United States could serve as laboratories to “try novel social and economic experiments without risk to the rest of the country.”
Brandeis’s vision of the states as social laboratories has been realized throughout history, most recently in Massachusetts. In 2006, the state legislature enacted and Governor Mitt Romney signed into a law a package of health insurance reforms that served as a template for the health care legislation recently passed by Congress. The experiment in Massachusetts is yielding empirical results. I am not surprised by the outcome. In fact, I predicted many of these in the course of the national the health insurance debate.
For example, I wrote that the regulations forcing health care insurance companies to provide coverage to people suffering from preexisting medical conditions would raise premiums for everyone. After all, the bedrock principle of insurance is the concept of shared risk. If greater risks to the insurance pool are mandated by law, then everyone will have to share the risk and absorb the costs. The money to pay for the chronically, gravely, and even terminally ill must be borne by someone.
This is occurring in Massachusetts right now, reports Robert Weisman of The Boston Globe. To spread the costs of insuring those who have pre-existing conditions, Massachusetts health insurance companies asked for a major rate increase. The state, in a vain attempt to conceal the true cost of insuring those with preexisting conditions, denied proposed increase. Facing a deficit of millions of dollars and possible insolvency, six of the largest health insurance companies filed a lawsuit against the state, asking the courts to allow their rate increases. Reporter Robert Weisman explained:
A half-dozen health insurers yesterday filed a lawsuit against the state seeking to reverse last week’s decision by the insurance commissioner to block double-digit premium increases — a ruling they say could leave them with hundreds of millions in losses this year.
The proposed rate hikes would have taken effect April 1 for plans covering thousands of small businesses and individuals. Insurers wanted to raise base rates an average of 8 percent to 32 percent; tacked on to that are often additional costs calculated according to factors such as the size and age of the workforce.
Yesterday’s legal action sets the stage for a showdown between state regulators and the health insurance industry.
Governor Deval Patrick has made reining in runaway health care costs a centerpiece of his administration and his campaign for reelection — contending they are stifling the capacity of small businesses to create jobs. At the same time, health insurers argue that government is forcing them to sell policies at a loss that is unsustainable as the costs of medical services climb.
Another prediction that I made was that the fines that Congress called upon the IRS to collect from those who fail to buy health insurance will not be severe enough to force the uninsured onto the insurance rolls. On the contrary, the law mandating that insurance providers have to accept people with preexisting conditions takes away the major incentive for people to sign up for health insurance: fear that they will be deemed uninsurable, should they get sick or injured. Without that fear, I wrote, people will game the system, waiting until they need medical attention before signing up for health insurance. The social experiment in Massachusetts is proving this prediction to be correct as well.
Staff Reporter Kay Lazar wrote in The Boston Globe that many Massachusetts residents are paying the small fines rather than buying health insurance, only signing up for health insurance when they need the benefits to pay for an illness or injury. Since Massachusetts law prevents the health insurance companies from denying care to the scofflaws, the insurers must pay for the necessary treatments. Lazar writes:
Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.
In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state’s largest private insurer provided the Globe.
The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company’s data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.
“These consumers come in and get their service, and then they leave because current regulations allow them to do it,” said Todd Bailey, vice president of underwriting at Fallon Community Health Plan, the state’s fourth-largest insurer.
I am not a seer or economic wizard. Anyone with common sense knows that insurance companies must collect enough money in premiums to cover the benefits they pay. If the law allows people to refuse to pay into the system yet forces companies to provide full benefits when needed, that system cannot endure. Either the government will bail it out, and thus take control of it, or it will simply go bankrupt. The same thing is about to happen on a national scale. The laws of actuarial science cannot be changed, as the Massachusetts experiment has shown. The only hope is that the results of this social experiment will be heeded by the next Congress, fueling the kinds of changes to the law that will preserve the private health insurance system that has worked so well for so many for so long.
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