This afternoon, Health Care for America Now (HCAN) hosted a press call outlining some of the remaining loopholes in federal health care reform legislation. Rep. John Garamendi (D-CA), health expert Karen Pollitz, former Blue Cross chief medical officer and former state regulator Michael McGarvey, and Wendell Potter urged lawmakers to include a national health care exchange in the final health care reform bill.
“The state governments vary in their ability to enforce and the influence of the insurance industry varies throughout the states and even in states that have a strong regulatory framework like California, you can wind up with a commissioner that has no interest in protecting consumers but rather protecting the industry.” “You need a broad based exchange because many states would never be able to do because they’re just plane small to begin with,” Garamendi explained.
The experts stressed that state based exchanges could not guarantee insurer compliance with the new regulations but also warned against various ways insurers could use the weak regulatory language in health care reform to game the system and avoid covering the sickest and most expensive applicants.
Listen to a compilation:
1. Employer wellness exception: The House and Senate health care bills allow insurers to provide incentives tied to voluntary “wellness programs.” “Current regulations allow group plans to offer rewards up to 20 percent of premium rates for employees who meet certain health goals.” The Senate bill would permit insurers to vary premiums by 30% and officials at the Health and Human Services Department could bump that variation up to 50%.” “Now instead of being able to charge people more because they’re sick, insurers will be able to charge them more because they’re not well [and not able to participate in the wellness initiatives.] And instead of calling those people victims of discrimination, we’ll say it’s their fault,” Pollitz said on the call.
2. Employer plans exempt from some regulations: Under the Senate bill, large employers can’t discriminate against pre-existing conditions or impose life time or annual limits on coverage. But since insurers in the large group market are not required to provide essential benefits packages, they could associate certain treatments with very high deductibles and cost sharing.
3. Insurers will seek to do business in weak state exchanges: “If this is done on a state-by-state basis, you can be sure that there will be a race to the bottom in a sense, by insurance companies seeking to do as much business as possible in the weakly regulated states,” McGarvey said. Garamendi recalled cases in California where “we spent a lot of money chasing after companies that were illegally operating in California but where licensed in other states and frankly were selling just absolute junk.”
“It’s very important in health reform and for pooling and for consumer protection, for all of the rules to work together and to be air tight. As soon as you sort of leave an opening, the tendency to exploit that opening for purposes of discriminating and not paying claims is going to be used,” Pollitz said, suggesting that House and Senate negotiators have one final opportunity to close the loopholes as they merge the two bills. In fact, Democrats would be foolish to ignore it. Reform that allows insurers to circumvent the new regulations and push Americans into bankruptcy would not only severely disadvantage the American public, but it would also create serious political consequences. The effort will lose its constituency and rob the party of its crowning domestic achievement. And if Democrats don’t address these known problems in the final bill, they may be too overrun by the unforeseen consequences of the legislation and the implementation process to address them after reform is enacted.
It’s also worth nothing that the public may be fed up with the reform process, but it could very well support a tougher crack-down on insurers. A recent CBS poll found that 43% of Americans don’t think reform goes far enough in regulating health insurance companies.