Yesterday, Aaron Carroll noted how private HMOs participating in Medicare successfully pushed sicker individuals off their rolls and suggested that insurers’ knack for manipulating the system holds important lessons for health reform implementers. Indeed, many are already raising alarms about a little noticed provision in the health care law that would allow insurance companies to lure younger and healthier Americans out of the exchanges and into so-called mini health plans, which have low annual limits and very modest benefits.

As Ken Terry explains, if an insurer can prove that “switching to comprehensive coverage would lead to significant premium increases or force employers to drop insurance benefits,” they can continue to offer low-cost, low-benefit plans:

This lack of universality could cause the same kind of “death spirals” that occurred in the small-business health insurance purchasing alliances of the 1990s. If healthy people tend to buy low-cost insurance outside of the exchanges, the increasing proportion of sick people in the exchanges could force rates up and induce carriers to withdraw from them. [...]

This is where the HHS determination on waivers comes in. A restrictive approach would mean that most plans offered outside of the state exchanges would have to be similar to those inside of them. This offers the best chance for the exchanges to survive: Because people would receive federal subsidies only for insurance purchased through an exchange, healthy people would be less likely to leave the state-sponsored market to buy a policy that was nearly identical to one offered through the exchange. But if HHS takes a looser stance, and mini-plans endure, many healthy people and firms with healthy employees will buy their insurance outside the exchanges, even without subsidies. If so, the exchanges will become unprofitable for insurance companies to participate in.

HHS certainly has its hands full — allowing insurers to offer mini plans outside of the exchanges could undermine the entire foundation of the law; cutting them off would force some businesses to drop coverage all together and push some beneficiaries into more comprehensive and more expensive coverage. But health experts and consumer advocates I spoke to believe that in some ways the problem is overstated. They claim that beginning in 2014, demand for the mini plans will naturally diminish since these policies won’t offer the standard benefit packages or meet the actuarial value of creditable coverage — the insurance that complies with the individual mandate requirements. The problem is in the interim. As younger and healthier individuals continue to buy these subprime policies, they will fall victim to the fine print and annual limits and abdicate their eligibility in more comprehensive programs like Medicaid.

In 2014, the more pronounced opportunity for cherry picking is in the structure of the Bronze plan. Under the law, insurers that participate in the exchange are required to market the Silver and Gold tier plans in the exchanges but are exempt from marketing the Bronze plans to exchange beneficiaries. Insurers could therefore sell the lower-cost/high deductible Bronze plan outside of the exchange or stay out of the exchanges altogether and attract healthier people into the non-exchange nongroup market. Some states like California are trying to avoid this outcome by requiring insurers “to provide the same types of policies inside and outside of the exchanges.” But as expected, they’re receiving a lot of opposition from the insurance industry.

Since President Obama supported alternative malpractice reforms as a Senator, I expected health care reform to include something more robust than demonstration projects dedicated to exploring different initiatives for improving patient safety and reducing costs. After all, Obama co-sponsored Sorry Works legislation — an initiative built on the assumption that “disclosure and apology” encourages providers to “deal with medical mistakes: [r]ather than stonewalling patients and relatives.” The approach pushes hospitals and institutions to address their mistakes and has found some success in lowering costs.

Just yesterday, a new study in the Annals of Internal Medicine of the period in which such a program was implemented at the University of Michigan Health System found that “legal costs went down, as did the number of new claims for compensation, the number of claims compensated and the time it took to resolve a claim.”

But whether costs and the number of claims declined as a result of the new policy isn’t clear, since there was no control group — and claims in the state were generally on the decline. (The university system did have fewer claims than were predicted by historical trends and its own models, the study says.)

It’s also unclear whether the same results would apply to physicians in private practice or who purchase their own liability insurance; UMHS docs were covered by their institution. The authors say the results suggest that such a disclose-with-offer program can be implemented without exacerbating legal costs and that it can address some of the problems of the medical liability system, including long waits for compensation.

The accompanying editorial calls the study “promising” but notes a couple of other limitations, including the fact that “the authors could not distinguish disclosures initiated by the health system from those offered in response to a patient complaint.” (In other words, it’s hard to know how many of the voluntary disclosures were voluntary.)

Sorry Works may not be a silver bullet, but it’s at least part of the answer to controlling malpractice costs. And its success in this study only suggests that doctors and hospitals can implement solutions that are independent of Congressional action, with government funding. In June, HHS announced that it would be distributing $20 million in development grants and planning grants “to states and health care system” to develop and test successful models for reducing malpractice costs. The funding provides systems with an opportunity to test run some of these alternative models.

House Minority Leader John Boehner (R-OH) has some fun with Robert Gibb’s “professional left” comments in this morning’s USA Today. Noting Missouri’s recent ballot initiative repudiating the individual health insurance mandate, Boehner lampoons the Democrats for passing reform over the objections of the voters. “This is the first time in American history that Congress has passed a law mandating that you buy something simply because you’re breathing,” he writes:

Yet the Professional Left running our government isn’t listening to Missourians or anyone else. The Obama administration is fighting to stay in the business of forcing you to buy health insurance and taxing you if you don’t. The law itself cites the power to regulate “commerce.” Democrats compare it with how nearly all states require car owners to purchase auto insurance. You don’t need to purchase a car. You do need to breathe.

But breathing is precisely the point! While you have no need for auto insurance if you don’t have a car, everyone’s body needs to breathe and will eventually stop breathing or have trouble breathing. Mandatory health insurance will protect individuals from this eventuality by requiring those who can afford insurance to take responsibility for their own health and purchase it. As Sen. Chuck Grassley (R-IA) explained in June of 2009, “when it comes to states requiring it for automobile insurance, the principle then ought to lie the same way for health insurance. Because everybody has some health insurance costs, and if you aren’t insured, there’s no free lunch. Somebody else is paying for it.” “So I think individual mandates are more apt to be accepted by a vast majority of people in Congress than an employer mandate,” he added. “I believe that there is a bipartisan consensus to have individual mandates.”

The mandate also isn’t as “unprecedented” as Boehner suggests. Republicans — like Grassley — supported the requirement in the 1990s, but the government has been compelling individuals to purchase certain goods since the old days of the Republic. As Ian Millhiser explains, “the Second Militia Act of 1792, required a significant percentage of the U.S. civilian population to purchase a long list of military equipment.” This Act became law only a few years after the Constitution was ratified, in President George Washington’s first term. Many of the Members of Congress who voted for the Act also were members of the Philadelphia Convention that wrote the Constitution.