Are we regressing to the past, or evolving to a future that mimics the past? Whatever you call it, we are throttling full speed ahead toward cheap insurance.
This president, a would-be populist, vowed to save everybody money. Health insurance is expensive. Without subsidies from employers or government, nobody would enroll. And today, even with subsidies, premiums are often high. Some Americans don’t want to pay high premiums. Some Americans can’t pay the premiums. Still others don’t want insurance. They don’t think they will need it; they will sign up when they do.
The deus ex machina from this administration: cheap policies. We will make Americans richer.
“Obamacare” essentially axed cheap policies. With Obamacare’s list of “essential services,” its cap on premiums and its exclusion of pre-existing condition time-lags, it barred insurers from marketing Model T policies (a deceptive euphemism – Model T cars, unlike Model T policies, worked). Obamacare allowed the Model Ts, but only as “temporary insurance” – designed to cover an enrollee for three months. Bureaucrats considered them a stop-gap until “real insurance” kicked in.
No more. This administration wants to extend that “gap” to 364 days. (Longer “gaps” require Congressional approval.) If insurers’ lobbyists work their magic, temporary may last longer.
In the bad old days of Obamacare, people who didn’t sign up for one of the full-bodied, more expensive policies incurred a fine. The fine (2.5% of annual income or $695 per person, whichever is greater) cost far less than the lowest-cost premium; in 2019 the fine will end. (The administration is letting stand the penalties for employers.) The freedom-to-say-no is a cornerstone of Healthcare 2018.
The benefits are financial. These policies cost far less than traditional insurance; e.g., $100 a month, versus $500 a month. A boon for consumers!
The downsides are buried in the fine print, obscured in the marketing hype.
First, “cheap” insurance can leave the enrollee with astronomical bills. Most plans don’t cover pharmaceuticals, maternity care, mental health or substance abuse treatment, preventive care or pre-existing conditions. The plans have high deductibles – as much as $10,000, in addition to co-pays up to 50%. Consumer Reports describes an enrollee who, soon after enrollment, was diagnosed with oral cancer. The policy, though, was clear: coverage would not kick in for 30 days. The patient now owes $200,000, is waiting to age into Medicare for reconstructive jaw surgery.
To add to an enrollee’s woes, short-term insurers can refuse to re-enroll a sick enrollee. In fact, from the start a short-term insurer can reject ill applicants.
In the pre-Obama past, nonprofit insurers and nonprofit hospitals reluctantly absorbed some of the “non-reimbursed” costs from uninsured and underinsured patients. Today, there is no ready cadre of nonprofits willing to absorb the losses. In this Newly Great America, citizens who get sick stand on their own wobbly financial feet. Expect health-related bankruptcies to rise.
Second, once we open the market floodgates to Model Ts, we will have to let “traditional” insurers re-introduce the time-lag exclusions for pre-existing conditions. Otherwise, healthy young people will enroll in a cheap policy. Then, at the first ominous diagnosis, they will drop that policy for a more inclusive one.
Those insurers who offer inclusive policies will be disproportionately paying for sick enrollees. And those insurers who offer cheap policies will increasingly fill with healthy people. Expect a sharp divergence in premiums: higher premiums for “inclusive” policies, lower ones for cheap policies. A large pool spreads the risk: one traumatic brain injury in a pool of 5,000 people will cost far less, per enrollee, than one in a pool of 1,000. When you carve out Model T policies for healthy enrollees, you end up with cheap premiums for them – but soaring premiums for everybody else.
Third, we risk watching a swathe of underinsured Americans – many the “ordinary Americans” this President vowed to help — go without treatment. Many diseases, untreated, can lead to consequences: hypertension to strokes; glaucoma to blindness; diabetes to amputations; cancers to early deaths. As a nation, we have started to retrench on Medicaid, leaving more Americans with no coverage. Cheap policies will leave more Americans with almost-illusory coverage.
Under the veil of making Americans richer, we are making Americans sicker.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.
From The Progressive Populist, June 15, 2018
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