Health insurers press for high-deductible, low-benefit policies

Introduction

As we head into the final stretch before next week’s midterm elections, Americans continue to have wide-ranging views of Obamacare, but even many who have an unfavorable view of it say they would rather see Congress improve it than get rid of it.

In fact, according to the Kaiser Family Foundation’s most recent tracking poll of public opinion about the law, released last Tuesday, almost two-thirds of the public would rather see their member of Congress work to make the law better than to repeal and replace it.

The big, unanswered question, though, is what to fix and how to do it.

One often-cited criticism of the law is that it requires most of us to buy health insurance. The so-called “individual mandate” is especially despised by today’s Republicans, even though that party’s policy wonks thought it up back in the 1990s.

Abolishing it, however, would be tantamount to repealing the Affordable Care Act. That’s because the individual mandate is the act’s central pillar. While almost everybody likes the part of the law that makes it unlawful for insurance companies to refuse to sell coverage to anyone who wants to buy it, that provision doesn’t work without the individual mandate, as several states found out in previous years.

Take New York as an example. When that state’s lawmakers passed legislation several years ago to require insurance companies to offer policies to every legal resident of the state, the cost of coverage went through the roof because there was no accompanying individual mandate. Many insurers fled the state because they were afraid that far more unhealthy folks than healthy ones would become their customers after the law took effect, creating what is referred to in the industry as “adverse selection.” The only way an insurance company can stay afloat in such a situation is to raise rates substantially for all its customers.

Lobbyists for the insurance industry made it clear to members of Congress that they would do whatever it took to defeat the reform bill if the “guaranteed issue” provision wasn’t coupled with an individual mandate.

Seeking to avoid all-out war with the insurers, members of Congress went along with their quite reasonable demand.

Among the things insurers don’t like about the law, however, is that it made them stop selling junk insurance. Pre-Obamacare, even the biggest companies were selling policies that had sky-high deductibles and meager benefits. Some policies didn’t even cover hospitalization.

The law now prohibits insurers from selling coverage that doesn’t pay at least 60 percent of a policyholder’s medical bills (the bronze plans on the health insurance exchanges), and sets a limit on the deductibles and total out-of-pocket expenses.

Insurers are lobbying hard behind the scenes to get lawmakers to change the law to let them sell meager policies again, and they’ve turned to Democrats in red and purple states for help.

Earlier this year, Senators Mark Warner of Virginia and Mark Begich of Alaska, both Democrats who are in tight re-election contests, introduced a bill to enable insurers to sell “copper” plans that would pay only 50 percent of policyholders’ medical expenses.

As you can imagine, the legislation almost certainly was written by insurance industry lobbyists. The industry’s top lobbyist, in fact, has been championing the idea for a long time. Last April, Karen Ignagni, who heads America’s Health Insurance Plans (AHIP), floated the idea during a C-SPAN interview in Washington.

Just days before Ignagni made those remarks Politico published a column penned by Warner and Begich, along with their Senate colleagues Heidi Heitkamp, D-N.D., Mary Landrieu, D-La., Joe Manchin, D-W.V. and Independent Angus King of Maine, which argued for allowing copper plans to be sold. While I’m sure the authors would never admit it, I’d be willing to bet it was written with more than a little help from their friends at AHIP.

Ignagni and the senators suggest that copper plans would be more affordable. While that might be true if you considered premiums to be the only cost of insurance, the reality is that premiums are only part of the cost. Out-of-pocket expenses also have to be factored in.

Prior to the passage of the Affordable Care Act, thousands of people found out too late that the policies they bought because premiums were comparatively low were woefully inadequate. Many people who were enrolled in those plans were forced into bankruptcy because of the medical bills they were on the hook for after a serious illness or accident.

Health insurers would love to be able to sell policies with extremely high deductibles again because they never have to pay out much in claims.

Allowing such plans to be sold is not the way to “fix” Obamacare. It makes no more sense than repealing the individual mandate. While it would be good for insurance companies’ bottom lines, it would not be good at all for the unfortunate folks who bought those policies and then wound up in bankruptcy court because of medical bills they couldn’t pay.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.