Crossposted from The People's View.
Last month, a monumental step was taken in America's promise to make health care a right for every American and not a privilege for only those who can afford it. It was but a first step, but a damned good first step. But some, under the guise of a promise to help people fight insurance company abuses, cannot help the urge to malign the achievement of the new law.
There are several pieces of misinformation being spread here.
One of the worst is that without direct price control authority in the hands of regulators - or at least the authority to control any increases in price - insurance affordability is nothing but smoke and mirrors. That's false. There are several ways the new law delivers on affordability.
Recall that the individual mandate is only applicable to those who can find insurance for under 8% of their income. That's a maximum. So if insurers want people subject to the individual mandate, they must offer insurance within those limits, at least for people with incomes that is more than 400% of the federal poverty level. In other words, for an individual with an income of $45,000 per year (who gets no subsidies), insurance companies must offer coverage costing $3,600 or less in premiums. Given that insurance companies are not allowed to vary prices based on income, they must offer that plan to all individuals with all income levels.
Now, what are the incentives for the insurance companies to offer a plan at all, other than the fact that they want people subject to the individual mandates. Why would they care if people are subject to the individual mandate? Because, you see, they will no longer be able to deny (or even more) based on a pre-existing condition. If they do not offer affordable coverage and people are exempt from the mandate, they may well wait until they get sick to get coverage, knowing they cannot be turned down, and that they must be given the same rate as a person without that condition of the same age and smoking habit. That is not something insurance companies want. The only way for them to make money is to offer coverage to healthy people who won't use care all that much at a reasonable rate. And the law says that if they do, they must provide coverage at that rate to anyone else of the same age and smoking habit, regardless of health status.
Insurers can vary insurance premiums up by up to a factor of 3 based on age, which is not a good thing. Nonetheless, to do this, insurance companies will have to keep the rates of young people low enough so that enough of them stay in the system (the younger you are, generally speaking, the healthier you are, but also the less you make and the easier it is for you to be exempted from the mandate).
Individual plans will have a MLR of 80% and group plans 85%. Meaning that an insurance company must spend that much of their premium revenue on actual care rather than administrative expenses/profits. If they do not, they must write you a check for the difference at the end of the year, which is a pretty good incentive to keep the premiums reasonable. Keep in mind that in the individual market right now, the MLR is as low as 60%, despite the insurance industry whining about how much they spend on care.
The final legislation tightened up the actual premium caps for people receiving subsidies (yes, I said premium caps) and out-of-pocket limits for everyone.
I had prepared a full table including premium caps and out-of-pocket maximums previously; here is the updated version of it that accounts for the changes done through reconciliation.
|% of FPL||150||250||350||450|
|Income (first line = individual, second line = family of 4)||$16,245
|Out-of-pocket cap (first line = individual, second line = family of 4)||$1,983
|Out-of-pocket cap as percentage of income||12%||11%||10%||12%|
|Premium cap as percentage of income||4%||8.05%||9.5%||N/A|
|Worst case scenario cost as percentage of income||16%||19.05%||19.5%||N/A|
Where am I getting these numbers? The underlying Senate bill defines the out-of-pocket limits:
Sec. 1402. Reduced cost-sharing for individuals enrolling in qualified health plans. The standard out-of-pocket maximum limits ($5,950 for individuals and $11,900 for families) would be reduced to one-third for those between 100-200 percent of poverty, one-half for those between 200-300 percent of poverty, and to two-thirds for those between 300-400 percent of poverty.
And the reconciliation package improves on the premium caps:
The new health care law would limit premium contributions for the second lowest cost silver plan to the following percentages of income once fully implemented (in 2019):
- 133% up to 150% of Federal Poverty Level — 2%
- 150% up to 200% of Federal Poverty Level — 4%
- 200% up to 250% of Federal Poverty Level — 6.3%
- 250% up to 300% of Federal Poverty Level — 8.05%
- 300% up to 400% of Federal Poverty Level — 9.5%
So, any costs beyond those percentages for the second cheapest silver plan on a state’s exchange would be subsidized by the federal government.
The Kaiser Family Foundation subsidy calculator will give you the exact caps (and they refer to them as caps) for your income level as well as how much you can expect to pay for your insurance if you are buying in the exchanges.
Now, sure, it would be nice to have the regulators have the power to block any and all rate increases by whim, and I support Sen. Feinstein's efforts on that front. But as constructed now, insurance regulators would have the power to make insurers justify their rate increases, and if they are unable to do so and insist on the increase, regulators would have the power to bar an insurer from participating in the exchanges (thus losing them a huge chunk of business and a large chunk of money in taxpayer subsidies). So in essence, they do have the power to crack down on prices as long as an insurer wishes to remain in the exchanges - which they would because that's where the biggest pool of money is.
Now, does regulator pressure or public release of rates on insurers work? Sure, if regulators are effective. After California regulators started breathing down their neck and the rate increases became public, Anthem Blue Cross agreed to postpone their rate increases while state regulators reviewed the case. In Massachusetts, insurance companies are trying to sue the state regulators to try to hike rates, and so far not having much success. Insurance companies recently backed down from their attempt to find a non-existent loophole in the current law to cover children without regard to pre-existing conditions after Secretary Sebelius cracked down.
Substantively, even if regulators had that power, we need to keep in mind that while insurance companies are a problem, they are only part of the larger health care puzzle. Health care costs aren't insurance costs alone. Several areas of our health care costs need to be taken care of, and the new law gives us a good beginning on those (such as hospital costs, wellness and prevention, expansion of information about generic drugs). For more information on these other cost measures in the new law, you can see my Beyond Insurance series.
Next we have the fake outrage at the idea that there were deal-making on Capitol Hill to get health care passed. Oh noes! Really? Deal-making in Congress? For legislation? That never happens. Give me a break with all this faux outrage. There is no doubt that the process in Congress gets ugly, and especially for a big consequential piece of legislation. Should we try to change it? Yes. What we shouldn't do, though, is to pretend like deal-making on legislation is uncommon, or that any deal-making at all means a bill is unworthy of its name. For one thing, it was a deal that Senate Majority Leader Harry Reid made with Sen. Bernie Sanders that is largely responsible for the huge expansion of community health centers that Sen. Sanders said will revolutionize primary care. I have noted previously that as a result of health reform, for the first time in history, CHC's will have double the capacity than the number of uninsured. All because of "deal-making."
A deal had to be made with House Democrats too, to get a reconciliation bill passed expanding the subsidies, funding for community health centers, completely closing the Medicare prescription drug coverage gap, increasing the threshold and pushing back the timeline for the excise tax on high-cost plans, and having the federal government pick up the full tab of Medicaid expansion for the first three years - which, ironically, resulted from the much reviled "Nebraska Compromise" that, at the first instance, only reserved this "deal" for Nebraska. Did this "deal" that had to be made with House Democrats in order to move health reform forward make things worse? I don't think so.
Now, admittedly, there were also some deals that aren't particularly palatable. These would include the deal with pharmaceutical companies, which committed $80 billion to reduce the price of prescription drugs under Medicare, but which came at the cost of the White House refusing to put its weight behind a drug re-importation amendment in the health care bill, although they didn't discourage it, either. But this happens in the legislative process. It's not good, and it panders to people, but the concentration of special interests and money in politics makes some of it necessary. We have a lot to fix in our system; let's try to do that instead of impugning every bill's substance simply because "deal-making" was involved in it.
I think it's absolutely ludicrous to compare health reform with George Bush's Orwellian Clear Skies initiative which made the sky dirtier - it made things worse. If Eve is actually trying to equate the two, she is speaking out of both sides of her mouth: once saying the bill is better than the status quo and then turning around and saying it makes things worse. Sorry, you can't have it both ways.
So here's what I'm going to ask you to do, instead of bashing the very important historic reform that was passed and signed into law. I'm going to ask you to help make a good law better. I am going to ask you to make it stronger. Not because you think what we have accomplished together is crap. What we have accomplished together is amazing - we have finally made health reform happen after waiting for the better part of a century. But we need to keep working precisely because we have shown what we can accomplish together. The first step towards that is to support two things:
First, Alan Grayson's Medicare buy-in bill (HR 4789) that allows anyone to buy into Medicare at cost. If you really want Medicare for all, let people vote with their wallets and let's see where things end up. Call your House member, call Speaker Pelosi and call your Senators and demand an up-or-down vote on the Grayson bill.
Second, you need to pick up the phone and call again. This time, urge your member of Congress and Senators to support S. 525, the Dorgan-McCain-Snowe bill to allow drug re-importation.
Let's make things better because we did the right thing, not because what we did sucks. I'm proud of health reform, and I will be more proud with further reforms.