After arguing that progressive health care reform would ration care and deny coverage, the Bush administration “plans to drop Medicaid coverage for 18,000 low-income parents in Minnesota.”

According to the Star Tribune, the administration buried the $135 million budget cut “in a 29-page document outlining federal changes affecting the state’s subsidized health program,” MinneostaCare:

Most of those affected are parents of children who have been enrolled in the state children’s health insurance program (known as SCHIP)…The Bush administration’s opposition to covering parents with children’s health program funds, a practice used by Minnesota and a half-dozen other states that have their own programs for children’s health coverage.

The Bush administration argues that by denying coverage to parents, they can cover more low-income children. But a growing body of evidence shows that “expansions of parents’ coverage lead to enrollment gains among children.” In fact, “states that have expanded Medicaid coverage for low-income parents have experienced significantly greater gains in enrollment among eligible children than states that did not expand parents’ coverage.”

From a report by the Center for Policy and Budget Priorities:

Families USA also estimates that reducing federal funds to Medicaid acts “like a giant anti-stimulus package” that will lead to a loss in jobs and wages and “will force governors and state legislators to make increasingly difficult choices about providing state services.”

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The centerpiece of Sen. McCain’s plan to “help” those with chronic conditions to get health insurance is the creation of high risk pools in every state.

But, McCain has also said that he would ask the nation’s governors how to create these pools (with about 30 states having one today). Since Alaska is one of the states with a high risk pool, it might be interesting to get a sense of how Governor Palin might advise McCain on the creation of these pools.

Based on the high risk pool in her state, Palin’s advice would clearly be to create a high risk pool that: offers very expensive coverage, puts as much burden on individuals as possible, excludes preexisting conditions, and limits benefits as much as possible.

Alaska’s pool is one of the smallest in the country, with 510 enrollees (end of 2006). And, Alaska is one of the most expensive programs in the country—the total cost per enrollee of the program is $18,569 (when you include the enrollee premium spending and subsidies). In the US, the average family premium for an employer sponsored health plan is roughly $13,000—yes, that is for a whole family, not for an individual in Alaska.

Alaska’s high risk pool imposes very high cost sharing on enrollees, which limits enrollment and access to care:

- Premiums: Overall, the monthly premiums are very high. For example, if you are 55 years old and elect the PPO with the $1,000 deductible, your monthly premium cost is $1,404 a month ($16,848 a year). Assuming a two-person, middle class household making $43,750 a year (250 percent of the federal poverty level in Alaska), the premium cost for that one person would consume 39 percent of household income.

- Deductibles: Alaska has a minimum deductible of $1,000 (which is high, but not uncommon for high risk pools). Options exist to allow enrollees to choose from a range of deductibles up to $15,000 (which is very high, even for high risk pools).

- Out-Of Pocket Costs: The premium and deductible are not the only costs to the individual. When seeing an in-network provider, the individual is still responsible for 20 percent of the cost of most services. There is an overall cap on out-of-pocket costs, but that is as high as $25,000 a year for one of the policies.

Alaska’s preexisting condition exclusion and limited benefits hut enrollees:

- Pre-Existing Condition Exclusion: For many individuals in the Alaska high risk pool, pre-existing conditions are excluded for six months. This means that if you are in the pool because you have ovarian cancer, then you will not get any coverage for cancer-related services for six months.

- Limits on Benefits: The PPO plan does not cover many services, including for the following from Part I of the PPO contract: maternity coverage and fertility tests, routine physicals, immunizations, eyeglasses, and mental health benefits services are capped at $4,000 a year.

Alaska’s high risk pool discourages individuals from seeking preventative care and chronic disease services by making such care subject to a deductible. A plain reading of the benefits package shows that preventative care and chronic care services are part of this deductible. Many states will exclude those services from the deductible to encourage patients to get the chronic care they need. Instead, Alaska makes you pay out-of-pocket for such services until the deductible is met.

In his acceptance speech last Thursday, Sen. John McCain (R-AZ) rallied against “government bureaucrats” injecting themselves into the patient-doctor consult, limiting care, and rationing treatments. But if McCain believes that bureaucrats are the third wheel in the confidential patient-doctor relationship, then the senator — who, as a beneficiary of government-run health care has probably never had to appeal a denied insurance claim to an HMO — may be surprised to learn that insurance company bureaucrats are already crashing the date.

A study of the independent medical review process (IMR) in California revealed that “among all areas of dispute, IMR upheld the original HMO decision at least half the time in most clinical areas and for most services, but nonetheless, fully one-third of HMO denials were overturned. “This suggests that the external IMR process adds some patient protection to California’s health care system,” the study concluded.

Currently, “41 states (plus the District of Columbia)” offer consumers the “option of an external appeal.” According to the Kaiser Family Foundation, “the insurers are overruled in about half of cases, with the rate of patient victory ranging from a high of 72% in Connecticut to a low of 21% in Arizona and Minnesota.”

Stories of HMO nightmares abound. After listening to McCain’s acceptance speech, Thomas Hayes wrote an open letter to the senator, reminding him that insurance companies often deny medical claims:

After struggling with many courses of treatment over the years, her Urologist has settled on a particularly effective medicine. But her insurance provider, Health Partners, decided that was too expensive, and since she was a woman of a certain age they determined that she could just as effectively be treated with another class of less-expensive drug.

They didn’t consult with her Urologist, mind you, they just decided she was obviously one of those middle-aged women who has bladder/incontinence issues, and that she’d have to change to another medical treatment. After all, they’d paid for 5 years of an effective course of therapy already, so it was time to try something cheaper. It didn’t work. So they proposed another drug. It didn’t work. They proposed a third alternative. You guessed it: no success.

It’s unclear if McCain’s health care proposal, which shreds consumer protections by allowing insurance companies to market national policies from states with minimal consumer protections, would undermine the internal and external review processes. Would insurance companies be able to move to one of the 9 states that do not have a mandatory review process and deny claims without ever being audited? McCain’s health care rhetoric suggests that they might:

I offer a genuinely conservative vision for health care reform, which preserves the most essential value of American lives — freedom…In health care, we believe in enhancing the freedom of individuals to receive necessary and desired care. We do not believe in coercion and the use of state power to mandate care, coverage or costs. [Des Moines, 10/11/2007]

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