Brass Tacks: Will Senate Bill Make Healthcare More Affordable?
Conservatives protest healthcare reform on December 15, 2009 in Washington, D.C. Demonstrators, many bused in from around the country, protested next to the Capitol hoping to derail Senate healthcare legislation. (Photo by John Moore/Getty Images)
By Roger Bybee
"What value do the insurers bring to our healthcare system?" demanded Donna Smith, legislative advocate for the California Nurses Association.
Indeed, it has been the most fundamental question of the healthcare battle, yet is only being raised forcefully late in the game, when for-profit insurers and Big Pharma have largely configured "reform" precisely to their designs. "We’re preparing to…require people to purchase private insurance with almost nothing to control their costs and not much to regulate the insurers," Smith says scornfully.
And as the Senate leadership bill moves along, it is losing some of its most highly-touted features, like eliminating families’ worries that they might exceed annual or lifetime coverage limits and thus be driven into bankruptcy. And according to an Associated Press report, the Senate bill received a hugely momentous "tweak" that was bound to delight insurers:
As currently written, the Senate Democratic health care bill would permit insurance companies to place annual limits on the dollar value of medical care, as long as those limits are not ‘unreasonable.’ The bill does not define what level of limits would be allowable, delegating that task to administration officials.
PLANS HAVE FLOOR AND CEILING
"It’s amazing how disingenuous it is to claim that there is no lifetime cap, when there’s an annual cap," Smith remarked. Administration officials have been proclaiming that there is neither an annual nor lifetime cap.
The response to the "tweak" by Coloradan Nathan Wilkes, father of a young son with a serious blood disorder, is powerfully recounted by Smith:
Nathan responded to the latest news out of the Senate with the clarity of a father who has fought hard to support reform that would make our system better not more problematic, “Now it looks like such plans will have a floor before they start covering (beyond the deductible/out-of-pocket) and a ceiling at which they stop (no "unreasonable annual limits").
That is the sweet spot for profiteering health insurers. They avoid paying the common and the catastrophic, while soaking up premiums from all of us.”
The death panels allowed by this legislation are those set up and protected by the insurance industry – and tweaked into law by Congress and the President.
You simply cannot do this sort of tweaking and not have people notice. Did you think the Wilkes family wouldn’t notice when the annual cap is reached for Thomas and they have to start paying out of pocket or stop treatment?
Any forthright analysis would recognize that the provisions designed to expand coverage and add protections are actually honeycombed with major loopholes created by the insurers’ and Big Pharma’s lobbyists. These loopholes are so artfully crafted that they can be concealed to even the sharpest critics of the health system because of the sheer complexity of the Senate and House bills.
Thus, even the most basic question of affordability winds up being mostly ignored by the media, which has tended to focus on the "ideological" nature of the fight over a robust public option.
HARD-TO-FOLLOW FIGURES BURY AFFORDABILITY ISSUE
With so much data floating about, progressive reformer Jonathan Cohn, author of the excellent book Sick on the US health system, hailed the findings of a Congressional Budget Office report: On the Senate Finance Bill, Cohn noted that the report predicted lower costs for most Americans and for those with higher costs, substantially expanded coverage. In line with this logic, the Kaiser Family Fund provided a calculator on its website that would allow you to figure out what percentage of your income would be paid in premiums if you were an uninsured person getting coverage through a Health Insurance Exchange.
I decided to compare the Kaiser Fund calculations with Sept. 23 Washington Post figures for a family of four earning $54,000, which said the Senate Finance Bill would result in an enormous deductible of $5,000 with another $5,300 in premiums. In other words, a family could pay anywhere from 9% to nearly 20% on health insurance–far from affordable.
But when I read on the Kaiser site that such a family would pay only 3.1% of their income on premiums under the Senate Leadership bill, I was stunned because I had been frequently citing the Washington Post figures in recent articles. So what’s the real deal, I wondered?
According to Smith, who examined the Kaiser site, the discrepancy is due to the simple fact that Kaiser’s calculations don’t include everything a family is shelling out. "To say that anyone can set down and figure out costs for anyone is not possible," she stated, adding:
If you do raw calculation of premiums, that doesn’t say anything abut the annual cap on insurer payouts, deductibles, or co-pays. By the time you add in premiums, it’s nowhere near 3.1%. Most people are saying we’re lucky it’s 15-20%. What a sweet deal for the insurers!"
It doesn’t matter whether you are talking House or Senate bill. What you have is no longer going to give you healthcare security or financial security. Parents can do exactly what they’re supposed to so, and still have healthcare denied to them and their family members.
The elimination of pre-existing conditions, proudly hoisted aloft by the Democrats as a major achievement even though insurers had already agreed in 1992 to make that concession, is actually quite hollow in another sense. While gender rating is eliminated, premium-setting based on age is not. Age rating is still allowed in both bills, with the Senate bill allowing insurers to charge premiums for older workers that are as high as four times as much as the level for young employees.
The result: "A lot of people will be left exposed, by buying only those policies they can afford," as under the current situation, Smith said. "So they can still be driven to foreclosure and bankruptcy.
While seeing little to cheer about in the most central provisions of the Senate and House bills, Smith sees value in the vast expansion of Medicaid coverage (now apparently torpedoed by Sen. Joe Lieberman; see below) and the quadrupling of funding for community-based clinics serving the uninsured.
‘CADILLAC’ TAX: TURNING CHEVY PLANS INTO YUGO PLANS
Meanwhile, the AFL-CIO—which committed itself to a Medicare for all or single-payer system at its September convention in Pittsburgh—is busy fighting to make the current congressional bills as palatable as possible given the difficult legislative terrain and the high stakes for its members.
In particular, the AFL-CIO is fiercely resisting a Senate-initiated proposal misleadingly labeled as a tax on expensive "Cadillac" plans. Said Fred Rolando, president of the Letter Carriers union.
Ultimately, it is going to hit the Chevy plans that make up the bulk of insurance plans for government workers. The bill, as currently drafted, will turn those Chevy plans into Yugo plans.
Rather than snagging executives with lavish policies, the proposal will actually hammer workers who have high premiums because they live in areas where there is little competition among either insurers or providers. (For example, southeastern Wisconsin—where I live—has healthcare costs 30% above the national average).
INCENTIVE TO DROP GOOD COVERAGE
"What it looks like is that most of these excise taxes may cause employers to drop level of coverage for workers," predicted Smith. "You’d be buying a lower-cost policy with higher out of pockets costs for workers. That’s not cost-cutting, that’s cost-shifting."
At the same time, treasured priorities of congressional progressives are being smashed to the floor in rapid succession, thanks to the undemocratic 60-vote super-majority reauired in the Senate. "The public option" —designed to offer competition to for-profit insurers—has already been crushed to a microscopic scale, but conservatives like Lieberman (I-Conn.) and Ben Nelson (D-Nebraska) are demanding its complete eradication.
Lieberman, in an inadvertently progressive move, is also insisting on removal of the Medicare ‘buy-in" for 55 to 64-year-olds . This is a provision that Lieberman sees as dangerously expansive of public-sector health, but would actually saddle Medicare with only people unable to buy private insurance. Nor is it clear that potential recipients would be offered affordable rates.
"The Medicare buy-in would just create a big national high-risk pool," Smith noted. "It would takes a good program and burden it down."
SPOTLIGHTING INSURERS’ RAKE-OFF
On the brighter side, a progressive proposal advanced by Rep. Jan Schakowsky (D-Ill.) would require insurers to maintain a "loss ratio" of at least 90%. That would force insurers to allocate at least 90% of their revenues to patient treatment rather than profits, executive pay, marketing, lobbying, underwriting (devising costs for individuals and small groups), and other administrative costs. Currently, the average loss ratio is only 81% across the health insurance industry, with some companies paying out less than 60% for patient care.
While this proposal usefully highlights the parasitic nature of the insurance industry, it may not get far. Specifically, an AFL-CIO spokeswoman expressed little hope to WorkingInTheseTimes.com that Schakowsky’s proposal would make any headway in the Senate.
The current state of affairs is hardly encouraging, said Chris Townsend, legislative director of the left-leaning United Electrical workers for the past 17 years. The unwillingness to at least rein in, if not replace for-profit insurers, the absence of any strong public option or major cost-control mechanisms, the relative weakness of insurance regulation, and the "Cadillac" tax all leave Townsend convinced that substantial reform will not emerge in America if a healthcare bill is signed into law.
"These are Frankenstein bills, patched together with mismatching parts," Townsend predicted ruefully. "They will move and make noises, but they won’t work."