National Feb 26, 2010
Health-care summit showcases 'competition of ideas'
It turns out the current debate about Americas health-care system is largely a debate about private health insurance and how it should be regulated. Discussion is sprinkled with terms like pre-existing condition, rescission, cherry-picking, rate regulation, loss ratio, spread-of-risk, etc. This qualifies PIA members to understand precisely whats being discussed, far better than the average U.S. citizen is likely to comprehend these issues.
Early in the process, ideas like a "single payer" system dropped out of official discussion; and even a competitive "public option" for the uninsured has failed to attract enough votes in the Senate to become part of the administrations latest 11-page proposal.
This leaves us primarily debating issues that directly affect the existing health insurance system, within which PIA members work. The focus on private insurance showed clearly in the discussion held Feb. 25, 2010, at Blair House, billed as the health-care summit. It might more accurately have been named a health-insurance reform summit, as illustrated by some of the main subheads that organized the discussion: "insurance reform," "cost containment" and "coverage."
President Obama presided over the daylong debate that highlighted both the differences (many) and areas of agreement (few) between Democrats and Republicans about a system plagued by rising costs while many millions of American citizens go without insurance coverage. The primary philosophical divide between the parties concerns the kind and amount of regulation that should be applied to address these systemic problems.
Democrats want to bring everyone into the ranks of the insured. So do Republicans, but they prefer an incremental approach that would not be as sudden. Insurance agents understand the degree of regulation that has to be imposed on the free market for even the poorest risks to get access to affordable insurance, and why adverse selection would prevail if accessibility is guaranteed but people could wait until they are sick to start paying premiums. In the administrations plan, mandates would extend not just to the insurance industry: Individuals and some businesses would have new requirements to ensure that everyone gets themselves covered.
For agents working in states where community rating and open enrollment have long been realities, some of the insurance conditions that still prevail throughout the country may be dim memories, leaving them somewhat puzzled by some types of horror stories. However, even in community-rating states, availability and affordability–particularly in the individual market–remain distinct issues. Many may recall market dislocations that occurred when these regulatory changes were introduced. Quite a few insurers decided to leave the market rather than change their practices to the extent required by these rules.
So, the debate comes down to an approach that would bring coverage to some 30 million new people, but with the extensive regulatory apparatus that would be needed to make this happen–vs. an approach that would largely eschew new mandates or regulations.
What the two sides proposed. In the Feb. 25 summit, Republicans relied primarily on ideas in a House bill put forward by Minority Leader John Boehner, R-Ohio. Among the major ideas they contributed are: tort reform to limit medical malpractice suits and payouts; "association health plans"; allowing the purchase of insurance across state lines; and high-risk pools to provide coverage for those who cannot find insurance elsewhere. The Congressional Budget Office estimated that the Republican approach would bring about 3 million more people into the health insurance system. Republicans spoke about a step-by-step approach that would focus first on cost reduction, particularly through attacking waste in the Medicare system.
Democratic speakers put forward a far more extensive plan, distilled into the 11-page summary the White House had posted before the summit. Democrats contend a comprehensive approach is needed to "spread the risk" and the cost of bringing coverage to more people, particularly those with pre-existing conditions. The CBO said this proposal, a blend of two bills passed by the House and Senate, would bring coverage to about 30 million more people. It would include an "insurance exchange" providing a choice of plans offered by competing private insurers.
Such plans would have to meet minimum coverage standards. People would be required to carry insurance; some would be eligible for subsidies to help pay their premiums. Small businesses could get tax credits to cover their employees, although most small businesses would not face a coverage mandate. Employers providing some so-called "Cadillac" health care plans would be taxed. Democrats also would scrap the existing Medicare Advantage program, which currently pays a premium to private insurers to provide Medicare coverage plans. Health insurers premium increases would be scrutinized by an oversight panel. Democrats also prefer a medical loss ratio standard requiring a certain percent of premiums to go to medical care–leaving less for expenses like commissions and profit.
Areas of agreement. Both sides said they agree action should be taken to address rising costs and the increasing burden on the national budget. Democrats frequently framed the economic issues in terms of global competition and the drag of current health insurance costs on American businesses. Republicans stressed their concerns about adding the cost of a new "entitlement," projected into the future. On a few insurance reform issues, like extended eligibility for young adults to stay on family plans, the sides agree.
With respect to tort reform, Obama in his summation said that he is interested in Republicans ideas to reduce frivolous lawsuits and encouraged them to work with the administration, which has started offering incentives to encourage states that come up with their own plans in this area. Obama also welcomed a few ideas mentioned in passing by Republicans, such as ways of reducing medical errors, coordinating the care of individuals with serious chronic health conditions and greater transparency in health insurance pricing.
A number of speakers stressed some essential similarities between the Republicans association health plan concept and the insurance exchange approach. The intent of both is to bring larger groups of people together to spread risk, spur competition and provide more choices. Both sides agree that more choice is needed, with 75 percent of the private market now "highly concentrated" in a few providers.
But disagreements about how such plans should be regulated overshadowed similarities: Republicans resist the position of Democrats that such plans should have minimum coverage standards, saying states could be trusted to set any such rules. President Obama cautioned that such plans, and allowing sales across state lines, could encourage a "race to the bottom" toward states with the fewest mandates, resulting in cheap coverage that could prove inadequate if needed. Republicans defended the utility of high-deductible "catastrophic coverage" plans, coupled with health savings accounts; Democrats pointed out that many people could not afford the out-of-pocket costs they entail.
Whats next? Morning-after analysis suggests that the areas of disagreement remain far too great to produce any bipartisan consensus on legislation. This leaves Democrats with the prospect of reconciling the two bills they already have passed–one in the Senate, one in the House–into a single plan they can boost to the Presidents desk. This process likely would involve the House passing the Senate bill, while the Senate passes some "fixes" to its own bill that would be needed to bring enough House Democrats on board. No Republican votes are expected in either house, so the Senate "fixes" would go through as a reconciliation procedure, requiring only a majority vote.
PIA–protecting members interests. PIA has been involved at every step of the way–keeping any future insurance exchange products available for sale by agents, precluding unlicensed individuals from being authorized to advise insurance buyers, defending insurers antitrust exemption. On March 17, PIA members from throughout the country will converge on Washington to carry on the fight. Here are the PIA Principles for Health Care Reform:
- Build on and support the private health care system, dont dismantle it
- Improve existing government programs
- Do not create a government-owned insurance agency or brokerage
- Preserve the role of independent agents and brokers
- Build upon successful state-based innovations
- Do not tax employer-provided health care benefits
- Encourage cost controls and wellness programs
- Congress needs to forge the broadest possible consensus before enacting any reform legislation