We Need A Public Health Insurance Plan to Keep Us S.A.F.E.

I’ve written several posts about why regulation alone is not enough to curb health insurance company abuses (Get Sick. See Health Insurance Vanish. Watch States Fail to Curb Insurance Company Practice. [1]; Nothing Intimidates Health Insurers Like the Public Health Insurance Plan [2]; Nation’s Two Largest Health Insurance Companies Chastised [3]).

The fact that insurance companies continually break regulations [4] (PDF) is one of the reasons we need a public health insurance plan to compete with them. As President Obama has said [5]:

“I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. And the insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange.”

The Washington Post recently gave us a look at how insurance companies will likely continue to discriminate against people with pre-existing conditions even if laws are passed laws to prevent such practices. The article, “Discrimination by Insurers Likely Even With Reform, Experts Say” [6], predicts “new biases against prior conditions” will rise up in response to a new regulatory framework:

“Any health-care overhaul that Congress and President Obama enact is likely to have as its centerpiece a fundamental reform: Insurers would not be allowed to reject individuals or charge them higher premiums based on their medical history.

“But simply banning medical discrimination would not necessarily remove it from the equation, economists and health-care analysts say.

“If insurers are prohibited from openly rejecting people with preexisting conditions, they could try to cherry-pick through more subtle means. For example, offering free health club memberships tends to attract people who can use the equipment, says Paul Precht, director of policy at the Medicare Rights Center.

“Being uncooperative on insurance claims can chase away the chronically ill. For people who have few medical bills, it is less of a factor, said Karen Pollitz, research professor at the Georgetown University Health Policy Institute.

“And to avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania's Wharton School.

“By itself, a ban on discrimination would not eliminate the economic pressure to discriminate.

“‘It would probably increase the incentive for cherry-picking,’ Pauly said. ‘I'm strongly motivated to try to avoid you if I'm not allowed to charge you extra.’

The article goes on to name some ways to stop the discrimination, but we know from experience with Medicare, that none of them can completely stop insurance companies from trying to avoid insuring people who actually need insurance. As Karen Pollitz made it clear to The Washington Post:

"In a competitive market, a good-guy insurer is a patsy. The race is to the bottom."

Medicare already does everything proposed in health reform legislation to curb cherry-picking in the private plans that contract with the government to provide benefits to people with Medicare, but the plans continue to do so, as the article explains:

“There are myriad ways health plans can attract healthier members, from the messages they advertise to the overall level of coverage they provide and the smallest enticements they add to their benefits packages...

“[A]ds for private health plans serving senior citizens on Medicare seldom feature people who are sick, said Tricia Neuman, who has studied the ads for the Kaiser Family Foundation. Many of the plans have offered benefits such as health club memberships, help buying eyeglasses, and preventive dental care, which may be more likely to sway healthy seniors than seniors who have severe and complex medical needs.

“Some private Medicare plans have offered relatively inexpensive enticements while requiring members to pay more out of pocket than they would under conventional Medicare for major expenses, said the Medicare Rights Center's Precht. In 2008, a quarter of the private Medicare plans charged members more out of pocket for Part B medications, which include chemotherapy drugs for cancer patients, according to a March study for the AARP Public Policy Institute.”

When I worked at the Medicare Rights Center we even had a few hotline callers say a private Medicare plan had told them they could not enroll because they have cancer. That is completely illegal, but they did it anyway. How many people do you think have been turned away from a Medicare Advantage plan because of pre-existing conditions who didn’t know their rights and simply took no for an answer, never calling anyone for help?

That is one of the many reasons we need a public health insurance plan [7]. It may not keep the insurance companies from continuing to do everything in their power to avoid people who need care, but it will give us all a safe harbor from insurance company abuses.

Call [8] your Senators and tell them you demand a public health insurance option to keep you S.A.F.E. [9] (PDF): giving us stability, accountability, financial security and efficiency.

UPDATE: MSNBC's Dr. Nancy explored the problem of cherry-picking: