Reply #4: We are all turning bronze--a really shitty color for older people paying 3X as much in premiums

[eridani]

Hospitals and Health Networks--The Four Americas

http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=6270005407
Health insurance exchanges could have a major impact on the health care marketplace.

Here are some things to watch for.

* We are all turning bronze. There is a growing body of evidence--from actuaries, academics, consultants and researchers--that when consumers in the exchange select insurance options, they will pick the bronze plan (a 60 percent actuarial value). By definition, these plans will have high out-of-pocket costs and may not cover as wide a range of benefits as the health reform enthusiasts intended.

Some in the health care delivery business see exchanges as a new source of patients with commercial insurance similar to the benefits that schoolteachers and firefighters enjoy. Not so fast. Not only will those schoolteachers and firefighters get their benefits rolled back as part of the global backlash against public employees, but those of us in the exchanges will be operating with skinny network, high-deductible plans.

* Exchanges could be a non-event or become the exchange that ate Manhattan. Depending on how exchanges are structured at the state level, they could have limited pickup. The proposed insurance exchanges have two huge advantages over some of the failed insurance exchanges across the country, such as California's PacAdvantage program for small business. First, the proposed exchanges have subsidies. Second, they have enabling rules. However, there is still a huge opportunity for states to make exchanges highly dysfunctional by not regulating the behavior in the nonsubsidized individual and small group market.

What killed PacAdvantage was brokers taking good risks outside the exchange and dumping bad risks into the exchange. Unless state legislation prevents this, it is highly possible that exchanges get selected against and spiral downward. Conversely, if exchanges are up and functioning and acceptable, there could be massive growth over time as employers see the benefit of giving their employees incentives to move to the exchange. This won't happen initially in 2014, but in a Cadillac tax world and with high-functioning exchanges, there could be massive growth. (And remember, we would all be pretty bronzed.)


Comment by Don McCanne of PNHP: If the stewards of the ACA-mandated state insurance exchanges are diligent, they may be able to avoid problems such as the death spiral of adverse selection. With careful design, they should be able to establish a functioning market of private health plans. What can we expect of this market?

The overwhelming majority of insurance shoppers will be purchasing their plans based on price, whether or not they qualify for subsidies. Since most will be relatively healthy, it will be the price of the insurance plans that will drive their purchasing decisions, rather than the unanticipated but potential out-of-pocket expenses that they would face only if they were unfortunate enough to develop significant medical problems. For the price discount, most purchasers will take a chance, gambling that they will stay healthy.

What plans in the exchanges will offer the lowest prices? The bronze plans. These plans cover an average of 60 percent of the medical costs and the patient is responsible for the remaining 40 percent. Although many would be eligible for subsidies, a recent Commonwealth Fund analysis (Gruber and Perry) demonstrated that one-fourth of middle-income individuals with medical needs would not be able to afford the out-of-pocket medical costs after meeting other necessary expenditures in their budgets. Thus choosing these plans is definitely a gamble, but one they must take since they cannot afford the higher costs plans - especially the gold and platinum plans (which are not Cadillac plans since about all they do is reduce out-of-pocket spending for relatively standard benefits).

What innovations will insurers use to keep their premiums competitive within the exchanges? Although they will have to provide a basic set of regulated benefits, they will be able to keep premiums priced at the lower end of the market by requiring large deductible and coinsurance payments, and by limiting provider contracting to a narrow network of the cheapest physicians and hospitals. This is what Ian Morrison is referring to when he says, "those of us in the exchanges will be operating with skinny network, high-deductible plans."

If the stewards do their job well and the exchanges are very successful in achieving massive growth - "the exchanges that ate Manhattan" - then, as Ian Morrison states, "we would all be pretty bronzed."

So if the exchanges work like they're designed to, what will we get, at best? Unaffordable deductible and coinsurance payments, with skinny networks which take away our choices of physicians, hospitals, and other health care providers, unless we're eligible for Medicare by being over 65 or permanently disabled.

Say, did anyone ever think that maybe it would be better to improve Medicare and provide it to everyone? That way we would have our choices of our health care professionals and health facilities, and we wouldn't have to face unaffordable out-of-pocket costs. This seems like an idea that maybe we should work on.

My comment: OFA messaging for 2012 on health care has so far consisted of charts and graphs and laundry lists of microconstituencies who have benefitted from ACA, which does not in the slighest resemble the values messaging of 2008. No surprise there, as the basic value underlying ACA is that your worth as a human being is directly proportional to how much money you have.

How France, Germany and Japan provide universal health care using private insurance based on the underlying value that EVERYONE deserves good health care.

--They treat insurance companies as public utilities.
--They absolutely forbid denying any claims whatsoever.
--They have fees directly set by the government for health care services.
--They have just one universal benefit plan in which items to be covered and costs are specified by the government--no platinum, gold, silver and bronze people allowed. (Private companies are usually allowed to offer supplemental plans covering items not in the basic plan, in some countries for profit.)
--They do not allow age rating.
--They have no deductibles, though co-pays are required in some countries.