Competing health insurance plans equally flawed
By Malinda Markowitz
San Jose Mercury News
10/25/2007
It’s time to wave the warning flag on the steamroller demanding action on health care this year - no matter what it is. Rather than resulting in sound policy, the drumbeat could just as easily produce a hastily designed “compromise” that perpetuates our state’s health care crisis while stalling real reform for years to come.
Consider Massachusetts, whose mandatory health insurance law is the model for Gov. Arnold Schwarzenegger’s proposal and which provided much of the inspiration for a similar legislative proposal vetoed by Schwarzenegger earlier this month.
The Massachusetts law was hurriedly rushed through its Legislature last year amid clamor for passage of a law that its advocates could claim solved their health care morass while burnishing the credentials of politicians such as Gov. Mitt Romney, then in the final stages of preparing his candidacy for president.
Today the law remains a mess. Despite tax penalties for failure to buy insurance, only 20 percent of the uninsured have purchased the mandatory plans - and 94 percent of those who have enrolled received full or partial public subsidies.
One reason so many are willing to accept the fines is the law’s failure to control costs.
Even the cheapest plans have high deductibles and co-pays, and huge gaps in coverage have eroded existing benefits for many families with modest incomes.
Massachusetts officials admit 18 percent of the uninsured cannot afford insurance, notes a report by the Santa Monica-based Foundation for Taxpayer and Consumer Rights. As Ben Day, director of Mass-Care, a vocal critic of the law, points out, “many of those who supported it are now saying the law will never work.”
Why does Massachusetts matter? Because both the latest Schwarzenegger proposal, and the alternative favored by Assembly Speaker Fabian Núñez and some of his allies, repeat the mistakes of the Massachusetts law.
Neither approach constrains skyrocketing premiums, deductibles, co-pays, drug costs or hospital charges. That’s a fatal flaw. Millions of Californians are likely to end up with junk insurance that increases their health insecurity with policies that will jeopardize their financial health if they use medical care or encourage them to self-ration and not use the care they still have to pay for.
Proponents of the two versions say they are cracking down on insurers by requiring them to provide coverage to everyone, but massive loopholes make that promise illusory.
The governor’s latest plan, for example, allows health plans to require information on a patient’s health status or history and permits them to raise rates further for “risk adjustment.” The Núñez bill permitted insurers to dump people with “serious medical conditions” into a public pool that would probably be bankrupted by having to pay for the sickest patients.
Two issues, both ominous for California working families, appear to be holding up the final back-room deal.
The first is a Massachusetts-style mandate forcing all uninsured individuals to buy insurance. As in Massachusetts, the price tag for the cheapest plans in the governor’s proposal is enormous deductibles and other high out-of-pocket costs, and a required minimum that a family must spend on its health plan which together could financially devastate many California families.
While Núñez and his allies have opposed the individual mandate, it seems likely a deal will be cut providing financial offsets for some middle-income families. But, as the Massachusetts experience proves, without effective cost controls, any offsets on an individual mandate are meaningless.
A second point of contention is how much tax will be levied on employers who don’t provide health coverage for workers. But both the amount favored by the governor, and the one in the Núñez bill that was vetoed, are substantially less than what the average California business offering health plans now pays, a clear incentive for businesses to reduce coverage or drop benefits entirely and just pay the tax.
Sadly, the main beneficiaries of a rushed “compromise” will be the same insurance companies that created the present crisis. They would harvest millions of new customers, with the government using its power and the public purse to further an insurance industry that will continue to be able to profiteer and deny care.
We don’t have to turn just to Massachusetts to see an example of how this can lead to disastrous public policy. A decade ago, the same “consensus” pushed the hurried passage of energy deregulation. That was followed by blackouts, skyrocketing energy costs for consumers, financial calamity for the state, and open thievery by Enron and other energy corporations.
Californians should demand that legislators pull the plug before we plunge into another disaster.
MALINDA MARKOWITZ is a member of the Council of Presidents of the California Nurses Association/National Nurses Organizing Committee and a registered nurse at Good Samaritan Hospital in San Jose. She wrote this article for the Mercury News.