Health Insurers Ask For More

From testimony before Congress delivered this week by Daniel T. Durham, Executive Vice President, Policy and Regulatory Affairs, America's Health Insurance Plans (AHIP) (http://waysandmeans.house.gov/uploadedfiles/durham_testimony_final_hl912...):

House Ways and Means Committee
- Subcommittee on Health
September 12, 2012
Hearing: Implementation of Health Insurance Exchanges and Related Provisions
Testimony by Daniel T. Durham, Executive Vice President, Policy and Regulatory Affairs, America's Health Insurance Plans (AHIP)

Minimum Coverage Requirements

Beginning in 2014, the ACA will require health plans to provide coverage for an essential health benefits (EHB) package covering a broad range of mandated benefits, some of which are not typically included in individual and small group policies today. The ACA further requires that coverage sold through the exchanges must be at one of four actuarial value levels: 60% (bronze); 70% (silver); 80% (gold); and 90% (platinum). As a result of these provisions, millions of people may be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have.

We believe that the EHB package must be affordable for families and small businesses and that affordability should be the cornerstone of consideration in defining the EHB package. The nonpartisan Institute of Medicine – in its recommendations to HHS – underscored the need to ensure affordability in defining the EHB standard and cautioned that "if cost is not taken into account, the EHB package becomes increasingly expensive and, individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA – enabling people to purchase health insurance, and covering more of the population, will not be met."

The imposition of broader benefit packages than what consumers and small businesses are purchasing today will force consumers to "buy up" coverage that they may not want or need. In recent months, many state departments of insurance and state exchange boards have requested formal actuarial and economic forecasts of the impact of the new insurance reforms on their state. These independent studies have found that several provisions, including the EHB and actuarial value requirements, will result in higher premiums.

Recognizing that these ACA provisions will have a major impact on the cost of coverage, we believe that the important goals of the EHB package can be met if HHS and the states place a high priority on offering affordable coverage options to consumers. In addition, consideration should be given to lowering the minimum actuarial value for coverage sold in the exchanges to ensure the availability of affordable coverage options and to allow smoother transitions to the new benefits packages.

Dr. Don McCanne's comment:

As the Affordable Care Act was being drafted, many of us in the policy community were very disappointed with the decision to include in the state insurance exchanges low actuarial value plans, as low as 60 percent (the plan pays 60 percent of covered costs and the patient pays the other 40 percent plus 100 percent of all services and products not covered). Even with the subsidies, the financial barriers to care will be too great for many patients. Now AHIP - the all-powerful health insurance lobby organization - is asking Congress to lower even further the minimum required benefits and the actuarial values of the plans.

The reason is obvious. They explicitly state that "affordability should be the cornerstone of consideration," but they are not referring to affordability of health care, rather they are referring to the affordability of their own private health insurance plans. They want their premiums to be low enough for middle-income Americans to be able to purchase their plans. They remain silent on the fact that reducing minimum benefits and reducing actuarial values of the plans will shift large portions of the costs to those who need care. (Again, the cost sharing subsidies are not adequate for covered benefits, and the patient is responsible for 100 percent of the costs of excluded benefits which would increase with this proposal.)

The private insurance industry got virtually everything that they asked for when the bill was written. Now they are coming along with a pitch that appeals to members of both sides of the aisle - we should make insurance affordable by allowing individuals to "buy only the insurance you need." For people who are healthy on December 31, 2013, can they really feel secure with a low actuarial value, minimal benefit plan that begins on January 1, 2014, when they have absolutely no idea what health problems they may face throughout 2014 and into the future? Of course not, though the high premiums of plans with adequate coverage may serve as enough of a deterrent that they would want to or may even have to take the risk that they will remain healthy throughout the year - a safe bet for the insurers but a big gamble for the patient. With time, it becomes even more treacherous for individuals to bet that they will remain healthy forever.

It is particularly appalling when they say that the principle reason for the Affordable Care act was to enable people to purchase health insurance. Some of us thought that the principle reason should have been to remove financial barriers to essential health care for everyone.

My comment:

The flaw in the Affordable Care Act is made obvious here. Cost is the principle problem in American health care. We pay twice as much for health care than do the citizens of other first world countries on average. Yet the "Affordable" Care Act does not address health care cost head on. Rather, it attempts to 'cover' more people with some form of health insurance made 'affordable' by government subsidy or dumbing down the benefit package or outright enrollment in a Government plan which is then farmed out to the insurance industry. This despite the easily demonstrated fact that the excess cost of the American health care system is the direct result of the flaws in the health insurance business model. How can we fix what's wrong with American health care by entrenching the very business model which is the cause of the problem?

Who cares if Americans have health insurance? We do not need health insurance. We need affordable health care. The Institute of Medicine just published a report which documents that we are wasting hundreds of billions of dollars each year on inefficiency and quality waste in health care delivery and financing. At the heart of this waste is the self-serving health insurance business model.

Politicians who dance around this issue by taking a nuanced stance concerning the "Affordable" Care Act are not helping with the essential heavy political lifting which must be done in order to rid our health care system of waste. It does a family no good to be able to get health insurance for a child with a pre-existing condition if that 'coverage' is of low actuarial value and full of the loopholes so typical of American health insurance products. As long as health insurers are controlling the political arenas they will continue to roll out ideas which serve their business interests well at the expense of patients and their families.

Dr. Joe Jarvis