HEALTH CARE/Joan Retsinas

Supplemental Insurance
and the Death of an Illusion

The slick prospectus asks disquieting questions: Will my HMO pay for the best treatments if I get sick? Will it let me see the doctors I want to see? Will it cover any disease I contract? Will it cover all the costs? If I answer "no" to enough questions, the prospectus offers a solution: supplemental insurance.

Supplemental insurance promises to fill those gaps -- for a hefty monthly premium.

The popularity of "supplemental insurance" in the United States marks the anxieties of managed care enrollees. Indeed, the constituents who want a "Patients' Bill of Rights" are potential customers for supplemental insurance. Whatever the advertising hype of their HMO, these enrollees look on their plans' administrators with the skepticism reserved for used car salesmen.

This surging business, however, also marks the death of an illusion. Americans have believed that, whatever the shortfalls of our employer-based system, we have "the best" health care in the world. For decades the opponents of national health insurance have posited a tradeoff: quality for coverage. On the one hand, countries with national health insurance have universal coverage. No citizen is uninsured. On the other hand, those countries don't have the "best." They have queues and rationing and supplemental policies to fill "gaps". Indeed, Medicare, our national health insurance for citizens over age 65, has a mega-gap: no prescription coverage. And Medicare enrollees buy Medi-Gap supplements.

So the debate over government health insurance has generally foundered over quality: In extending health care to everybody via some government initiative, would we reduce the quality of coverage that those who are insured now enjoy? Would some people be forced to trade down -- a Mercedes for a Yugo? Since the people-in-power -- our politicians, lobbyists, campaign contributors, and executives of insurance industries -- are well-insured, they haven't mounted the barricades to press for universal coverage. Instead, they have pressed to make insurance more portable (Kennedy Kassebaum legislation), more continuous (COBRA), and more accountable (the Patients' Bill of Rights) for those lucky enough to be insured. Even legislators willing to spend tax money to help the poor have not pressed hard for universal coverage; they have supported means-based state programs, targeted at children of "the working poor," but not one-policy-for-everybody, because they feared that that one policy would be mediocre.

Today, though, Americans are discovering gaps in their much-vaunted "best" insurance. The typical managed care policy is not exemplary. Along with co-payments, the typical policy excludes some treatments (e.g., surgery to correct cleft palates in newborns), some drugs (the limited formulary can sometimes be very limited), some physicians, some hospitals. The typical policy has spending caps. With gag rules and pre-certification authorization, it detours patients from specialists The typical enrollee can answer yes to most of the prospectus questions.

The death of an illusion is wrenching. Optimistically, the people-in-power, who have taken pride in the "best" health care system -- albeit one that bypasses 43 million people -- will re-consider national health insurance. The tradeoff between coverage and quality always was spurious; even while the number of people without insurance has risen, the quality of our coverage has dropped. The proof is the rise of supplemental insurance. Although all of us want to believe that, insurance-wise, we are driving a Mercedes, most of us are driving something closer to a Yugo.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I.

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