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Progressive Politics in Minnesota, the Nation, and the World

GOP Health Care: Simple and Utterly Useless

Category: Health Care
Posted: 02/05/10 13:55, Edited: 02/07/10 13:16

by Dave Mindeman

Yes, Mr. President, the Republicans have ideas on health care.

Ideas, eh? OK, let's take a really, really good look at these ideas. Eric Black at Minnpost has an interesting analysis about the Party Of NO and their so-called "ideas".

Eric tries to figure out if there is something, anything, they will say YES to. General conclusion? Nope.

But as to health care, Black points out the possibles....

Repubs are now emphasizing that they have health care ideas, especially three: capping awards on medical malpractice judgments, expanding Medical Savings Accounts, and allowing health insurance companies to sell, unregulated, across state lines.

So, let's look at these revelations....

Tort Reform: Republicans never really give us hard evidence of how this will improve things. They try to dazzle us with logic about "preventive medicine" being reduced. Obama has actually thought about this in his package and even agrees that it might, emphasis on might, reduce cost by about 2%. But without comprehensive reform, that 2% would be swallowed up in the juggernaut of continuing increases.

Let's look at Texas.

Texas implemented that (tort reform) plan in 2003, and since then the percentage of people without insurance has increased, the cost of health insurance has doubled, and the cost of health care (measured by per-patient Medicare reimbursements) has increased at nearly double the national average.

There were a few expected positives...

Texas tort reform did reduce malpractice insurance premiums and attracted subspecialists back into the state. But needless (and expensive) tests continue to increase in spite of that. Tort reform is a Republican favorite but remains unproven.

There's the kicker. Caps on awards won't stop defensive medicine. Republicans always think dollars are everybody's motivation. But it is not just fear of lawsuits that cause extra tests to be authorized. Some of it is just a fear of being wrong...a fear of missing something. Doctors want the best for their patients and if they can eliminate any uncertainty, they will do it.

Medical Savings Accounts. We already have Medical Savings Accounts or Health Savings Accounts. They have been approved since 1996 as the Archer MSA. You pay medical expenses with money that is tax free as long as it is used for health related expenses. They are combined with a high deductible insurance policy or "catastrophic" plan. The theory is that patients will use their tax free money to shop around and lower costs. And if they are hit with an expensive medical condition, the catastrophic plan will kick in.

There was a positive report on MSA's by the Center for Medical Progress at the Manhattan Institute last year. Their findings seemed to reflect that MSA's were having the desired effect....

As you may recall, HSAs are tax-deferred savings vehicles for anyone covered under a qualified high-deductible health plan. And it seems when it comes to annual premiums, HSAs increasingly are cheaper: According to the study, an employer-provided HSA plan carried an average annual price tag of $9,666 in 2007. By the following year, the bill dropped to $9,101. Compare that to an HMO policy, which rose in cost, averaging $11,879 in 2007 and $13,122 in 2008.

The catch?

The comparison was on premiums only. MSA's keep costs down by using high deductible insurance plans. Although the maximum deductible is set by law, the additional out of pocket can legally reach $11,600 for families. Of course, most don't use that figure but most average around $6,000 per year.

And although Republicans continue to insist that price shopping in medical care is a must to keep costs down, in reality, it is a pipe dream.

A CNN Money columnist wrote this last year....

You can cut spending in almost every area of your household budget. But as I discovered yesterday during a trip to the opthamologist, health care is one category where prices remain stubbornly sticky. There are no end-of season sales to take advantage; it's tough to research costs in advance; and you're at a disadvantage in deciding which services are critical and which are discretionary. I left the doctor's office owing $400 for the exam, lenses and frames?and I have insurance.

Insurance Purchases Across State Lines. This is the newest Republican "solution" that gets repeated over and over without any details to support it.

First, let's define what this means...

(It means) simply that an insurer could sell their product to any person in any state. Theoretically, this would mean consumers have a much greater range of insurers from which to choose, meaning increased competition and lower premium costs.

But in actuality, of course, it is never that simple:

The fact is, such a change may end up benefiting only those who are young, fit, and healthy ? people who are low-risk in the eyes of insurers, and who can have their pick of policies. Anyone who is moderate or high risk will eventually find that getting affordable insurance, or perhaps even any insurance at all, becomes much harder.

and the reason for that is?

The problem is, however, to an insurance company risk is still risk. The perceived risk of an individual who is fifty years old, overweight, and a smoker won?t decrease just because that individual can buy insurance anywhere in the country.

And if an insurance company can offer cheap premiums to entice low-risk people from all over the country, they?re that much less likely to continue offering any type of insurance to higher-risk individuals.

In addition to that, what will the states do with the mandates that have required insurance companies to increase the quality of their care? Minnesota has fought hard to make its coverage to be some of the best in the country. That didn't come out of the goodness of the insurance company heart. It took legislation.

If we can suddenly buy a policy from a Mississippi insurer, it might be cheaper, but what about coverages? Will they be required to meet Minnesota requirements and thus probably have to raise their rates for this state? or can they maintain their own policies and thus spark a race to the bottom on quality of care?

None of this is as simple as our Republican friends would have us believe. It is easy to just be against something when you don't really have to be for anything.

The bits and pieces that the GOP promotes will not lower health care costs at all (in fact, if they were to be implemented alone, health care costs and premiums would rise faster)-- not without being part of a larger comprehensive plan. Obama isn't insisting on this large scale overhaul because he wants to. It is the only real way to reign in costs.

That is, of course, unless you accept single payer as the plan.

But that is a whole other discussion....
comments (1) permalink
02/09/10 21:33
The weather situation in Washington may affect the timing of the vote (possibly delaying it until after 2/22) but Health Insurance Industry Fair Competition Act may be offered for a vote.

The legislation's principle sponsor is Democrat Tom Perriello (who I believe beat Virgil Goode of the Koran/Ellison fame).

Perriello?s measure?co-patroned by fellow freshman Democrat Betsy Markey of Colorado?would repeal the health insurance industry?s antitrust exemption that has been on the books since 1945.

The Democrats? two-page bill would ?end special treatment for the insurance industry that allows them to fix prices, collude with each other, and set their own markets without fear of being investigated,? a statement from Perriello?s office said.

In other words, Perriello?s bill aims to allow the federal government to investigate health insurance industry price-fixing allegations.

?It?s time for Washington to decide whether we stand with patients or profiteering, whether we believe in market competition or collusion between politicians and insurance monopolies,? Perriello said. ?It?s time to end the monopoly protections that Washington has protected for decades as prices skyrocketed. It?s time for a simple, clean bill?no carve-outs or special deals?that forces insurance companies to compete. It?s time to put patients and cost relief first. Americans deserve to know who stands with them against the price gouging of middle-class and working-class folks.?

Two thoughts : Will Kline and the other Republicans still find fault with this legislation when it essentially does what is outlined would now allow insurance to be sold across state lines.

Second, if Pawlenty feels "selling across state lines" is part of the solution, then why isn't he soliciting more insurance companies to bring their business to Minnesota ? Oh, I suppose one reason is if the Federal Government changes the rules, then Minnesota could lose $350 million that it collects in regulating the industry (which they collect as part of the premium that policyholders pay).

Oh, and the industry may not like the legislation changed. Robert Zirkelbach of America's Health Insurance Plans, the national trade group for the health insurance industry said there's no need to repeal the exemption. "Health plans are not engaging in anti-competitive practices such as price-fixing and bid-rigging as some have alleged," Zirkelbach said. "Health insurance is probably one of the most regulated industries in America at the federal level and all 50 states."

I'm thinking that if this comes to a vote, there will be a lot of Republicans trying to find a reason to vote NO. ... oh wait, that's how they always vote.



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