Tuesday, January 29, 2008

Group vs Individual: Mixed Feelings (Part 2)

As we discussed in Part 1, there's a (relatively) new game afoot in the employee benefits business. In that post, we examined a USA Today article detailing that sea change; now, we'll turn our attention to some of the factual problems of the article on which that was based. As promised, we'll also look at another proposed solution.
We'll start with this little gem:
"Critics say the change would end the long-standing, implicit social pact to provide coverage to sick and healthy workers alike."
Balderdash! There is no such compact. The truth is that the whole employer-based health insurance system is relatively new; it began as a direct result of the wage freezes put in place during the second World War.
There are other gross misstatements, as well. For example, the article claims that "everyone in the group pays the same premium." No they don't. Depending on the group, there can be different rates for men and women, older and younger employees, and those with dependents.
But Ms Appleby isn't content to misrepresent only group coverage:
"In most states, insurers can reject individual applicants for health reasons and can charge widely varying premiums based on the applicant's age, health history and other factors. Only in a handful of states, such as New York, Massachusetts and New Jersey, must insurers sell coverage to everyone, regardless of their health."
It's also true that water can kill you, but there are some pretty explicit circumstances where this holds true. What's not mentioned in the preceding quote is that "guaranteed issue" and "community rating" states have signficantly higher average premiums, as well as higher rates of uninsured. Again, there's a tradeoff of benefit versus cost [ed: I get it, I get it!].
The article continues with this little doozy:
"The idea comes as the percentage of employers providing insurance shrinks and the number of uninsured Americans grows."
There follows more of the discredited 47 million. Of course, we've already debunked that number, and one also wonders how many of these folks are uninsured by choice. Still, it's reasonable to ask: what about those folks who want to buy coverage, but find it either unavailable or unaffordable (and I mean by our own very strct definition)? In the individual market, it's slim pickin's indeed. There are state mandated (e.g. HIPAA) plans, some folks qualify for COBRA continuation (for a while, anyway), and there's a raft of new guaranteed issue "mini-med" plans available. None of these, however, seem to me to really address the underlying problem: the gummint-mandated plans are expensive and offer mediocre coverage, COBRA is available only in certain circumstances and for a limited time, and the mini-med plans offer less-than-ideal coverage.
Seems pretty grim, hunh?
I painted that picture to illustrate that, although I'm a fan of the free market, I'm not a sycophant (literally: psychotic elephant). Rather, it seems to me that we need to step back and take a look at some different ideas. The Association of Health Insurance Plans is an industry trade group that has come up with one such potentially helpful proposal: they've called on the states "to create guaranteed-access plans that would make insurance available to people with serious medical conditions. The group said insurers should provide coverage to those who aren't sick enough to qualify for the state plans." As I've stated many times, I'm all for state-based experimentation. It's true that what works in Kentucky may fall flat in Arizona, but whatever damage is done is contained. And, those things that work well can then be transferred and adapted.
In other words, incremental change. The challenge that I've seen so far is that politicians and consumers alike all want a "quick fix," ignoring the fact that it took us a very long time to get to our current situation. I certainly don't advocate taking 60 years to come up with a viable solution (or solutions), nor do I think it will take anything like that long. One place to start, of course, is to begin the dialog by agreeing that health care and health insurance are not the same thing, and that each system has its own set of problems, and solutions.
Okay, off my soap box.
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