The New York Times approached the story anecdotally, telling readers about a man who turned down pool coverage in Maryland because it was too expensive, and a couple who said the Maryland pool was a godsend—the ying and the yang of the risk pool business. The Times also raised the cost issue, giving the impression that the McCain camp was no longer sure how much their high-risk proposal would cost. In April, McCain’s domestic policy adviser said it would cost between $7 and $10 billion, but he told the Times that projections “could change dramatically” depending on how the program was structured. In other words, who will be left out and how much of the cost those in the pool will shoulder in the form of waiting periods, deductibles, and lifetime caps on payouts. These are details about which voters should have some clue as they weigh the candidate’s proposals.
Maybe they will take a hint from the insurance industry trade group, America’s Health Insurance Plans (AHIP), which, as it did in the 1970s, is advocating a risk pool solution—albeit with variations on the theme. AHIP’s Web site gives a head-spinning description of its proposal—one that could become a bureaucratic nightmare for consumers while keeping insurers in the risk selection game.
Diagrams show that consumers must first apply to an insurer’s health plan that gets an initial shot at insuring them if they are healthy. (The insurer gets the business if it’s good business.) If the insurer turns consumers down, or offers coverage at substandard (very high) rates, the consumers apply to the state guaranteed access plan, which determines how much a person’s ailments will cost the plan. If the state access plan finds that a consumer’s expected claims are 200 percent below the statewide average, the state plan denies coverage and sends the person back to the insurance company, which will then issue a policy with higher premiums. But if the claims are expected to exceed 200 percent of the state average, the guarantee access plan assumes the coverage. Whew!
The insurer is home free; it doesn’t have to cover someone on whom it might lose money. (A pretty sweet deal!) The industry palms the bad risks onto the state and keeps the good ones for itself. Apparently that’s how AHIP expects to achieve universal access to coverage. It wouldn’t be surprising if McCain, whose own plan seems vague, will look to AHIP for advice. All in all, a pretty good story.
Nice reporting on McCain's proposal.
A week or two ago, I noticed the items you are pointing out about McCain's proposal, and I in fact am alarmed about my own, and every middle-class-person's financial security if McCain is elected and gets his Health Insurance plan through.
As you more or less point out, McCain, by allowing insurance to be bought across state lines, is causing a MELTDOWN of statewise protections.
In particular, NY, NJ, MA, VT, ME have pure- or modified- community rating, and so people in those states who responsibly attempt to maintain health insurance continuously but wind up with a pre-existing condition may face unbounded rates (say at a point when they lose empoyer-provided insurance), as only healthy people buy cheaper insurance out of state and destroy the pooling of risk. I live in one of these states, NY, and am frightened to death of what McCain proposes.
Further, 26 states have high-risk-pools that are funded through assessments on non-high-risk-pool policies. Again, as the funding mechanism is destroyed by healthy people purchasing policies out of state from states with no assessment for a high risk pool, the cost can rise without bound for people with pre-existing conditions on these already very expensive high-risk-pool policies.
I am inclined, therefore, to actually characterize the McCain proposal as a DEREGULATORY MELTDOWN, quite parallel to the recent financial deregulatory meltdown.
(For those interested, I've actually done some looking into this meltdown issue, and the state-specific situation with pre-existing conditions, posted at: http://www.nastechservices.com/HealthInsuranceUSAPolicy.html )
Posted by Norm Spier on Thu 16 Oct 2008 at 09:37 PM