Waiving away health care reform

November 5, 2010

Helen Redmond reports that the insurance industry has continued to win concessions from the Obama administration on how its health care law will be enforced.

LAST YEAR, the Democrats passed the Patient Protection and Affordable Care Act (PPACA), claiming it was a major victory for the American people and a blow against a chronic oppositionist Republican Party that voted almost unanimously against it. The law, we were told, was a landmark domestic achievement on par with the passage of Medicare.

But 10 months later, it's a different story. With the resurgence of the Republican Party and its relentless and ridiculous assertion that the health care law was a trillion-dollar "government takeover," the Democrats are on the defensive, unable to defend the legislation against ring-wing attacks.

Now that the Democrats have lost big in the midterm elections, it's the unanimous opinion of political commentators that the health care bill was too ambitious and too divisive, and that the Democrats should have made more compromises.

But the truth is that the Obama administration compromised before the law was passed--and they've continued compromising and retreating ever since in the face of health care industry demands about how the law is interpreted and enforced.

Karen Ignagni, CEO of the lobbying group America's Health Insurance Plans
Karen Ignagni, CEO of the lobbying group America's Health Insurance Plans

SINCE THE passage of PPACA, insurance industry lobbying operations have shifted from closed-door meetings at the White House and in Congress to executive agencies--the Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services (HHS), the National Association of Insurance Commissioners and a variety of state insurance regulators.

Long gone is all the happy talk from Karen Ignagni, president and CEO of America's Health Insurance Plans, who said at the White House health care summit early last year: "We want to work with you. We want to work with members of Congress...You have our commitment. We hear the American people about what's not working. We've taken that seriously."

Today, Ignagni and the insurance industry are forcing confrontations with HHS Secretary Kathleen Sebelius and other high-ranking administration officials to blunt or get around new regulations that limit their ability to deny care and define benefits packages--and, thus, make profits.

Children with serious medical problems like cerebral palsy, cancer and asthma took the first hit.

Insurance companies view sick children as unprofitable and are reneging on promises made to the Obama administration to offer coverage regardless of pre-existing conditions. Several have made good on earlier threats and stopped issuing child-only policies.

Insurers, of course, openly admit that they prefer to cover healthy children because that means less spent on claims. For this reason, they are pushing back against a new regulation allowing families to buy coverage for children at any point, regardless of the children's health. The insurance industry argued such coverage would be bought disproportionately for children with medical problems, leading to a "coverage pool" full of sick children.

To address this "problem"--which, of course, is a "problem" only from the point of view of the profits of insurance companies--HHS official Jay Angoff struck a deal with the industry that would allow companies to establish limited windows of open enrollment, as short as one month, during which they would have to accept all children regardless of health condition.

The insurance carriers wanted more concessions, so Angoff agreed to allow higher premium charges for families applying for coverage outside of the open-enrollment period if state law allows it--and many do.

Now the fight to insure sick children will move to the states, where the insurance industry has a lot of power and an impressive track record of getting rate increases from acquiescent, business-friendly insurance commissioners.

For example, in Washington state, when Regence BlueShield announced it would no longer sell child-only policies, Insurance Commissioner Mike Kreidler ordered the company to sell the coverage. But the company insists Kreidler doesn't have the right to do this, and Kreidler himself acknowledges that his powers are limited and he is often reduced to "trying to persuade the major insurers to stay [in the market]."

Another provision of the health care law in dispute is the so-called medical loss ratio--a new regulation requiring insurance companies to spend at least 85 percent of premiums--and for small group plans, 80 percent--on actual health care costs, rather than overhead, marketing or profit.

Health insurers and employers are furious about the medical loss ratio. The low-wage employer McDonald's warned federal regulators that its insurer couldn't meet that standard, and that McDonald's would drop coverage for 30,000 workers unless it received a waiver. HHS quickly conceded to the fast food giant's demand.

Another regulation in the PPACA requires insurers to gradually eliminate annual caps on the amounts companies will pay each year for medical care. Corporations are fighting this, too, especially those that offer stripped-down medical plans otherwise known as "mini-meds"--among them, Disney World, Home Depot, CVS, Blockbuster and, once again, McDonald's.

These plans are the opposite of McDonald's high-calorie Angus Deluxe--they should be called "McMed" plans. A single worker can pay $14 a week for a basic plan ($727 yearly), but the coverage restricts annual payouts from the policy at $2,000 (no, that's not a typo). A medium plan costs $24 a week ($1,263 yearly), but caps benefits at $5,000. The "higher benefit plan" that costs $32 a week covers up to $10,000 a year.

One visit to an emergency room or a diagnosis of diabetes can exceed these caps.

Mini-med plans aren't adequate insurance. They're a rip-off that leaves workers underinsured and vulnerable to medical bankruptcy. But for insurers, mini-meds are a steady source of profits--which is why they are frantic to get HHS waivers.

They're getting them, too. The New York Times reported that the administration has given about 30 insurers, employers and unions one-year waivers on the new rules that phase out annual limits on coverage. You can bet the same bunch will be back for another waiver next year and the year after that.

THE REALITY is that the health care law was a multibillion-dollar giveaway of taxpayer money to the insurance industry. The PPACA "mandates" everyone to have coverage or face a financial penalty--which means a lot of people will end up having to obtain private insurers' inadequate plans.

The law gives a free pass to the pharmaceutical industry to continue charging whatever price they want for prescription drugs, and in a major concession to the drug lords, the PPACA doesn't allow Medicare to negotiate over prices for medications.

Meanwhile, nothing was done about the crisis of the employer-based system, leaving millions of people at the mercy of bosses who are shifting increased health care costs onto workers and paring back health plans. The skyrocketing costs of providing health insurance will lead some employers to drop coverage entirely--which will push millions of people to purchase "mandated" coverage through state health insurance exchanges.

Is it any wonder that an Associated Press poll conducted by Stanford University and the Robert Wood Johnson Foundation found that four in 10 adults think the new law didn't go far enough to change the health care system? The poll also found that Americans who think the law should have done more outnumber those who think the government should stay out of health care by 2-to-1.

With most of the PPACA still to go into effect, the latest figures from the U.S. Census Bureau show a dramatic increase in the number of uninsured--to 50.7 million, from 46.3 million in 2009, or about one in every six people in the country. The crisis in the employment-based health coverage system was the major factor driving the increase--over 6.6 million workers lost coverage, and with no end in sight to the jobs crisis, that number will only grow.

Health care reform is desperately needed now, but the major provisions of the PPACA won't go into effect until 2014--and even then, it's projected that 23 million people will remain uninsured in 2019.

It shouldn't come as a surprise that the PPACA is dead before arrival. Because of the concessions of the Obama administration and Democrats, the legislation didn't take on the fundamental issues at the core of the American health care system--the out-of-control costs, lack of access to a comprehensive and uniform set of medical benefits, and a insurance industry that is hell-bent on fighting any regulation that restricts profits.

In an article in the Los Angeles Times on the new health care regulations, Karen Ignagni commented, "The underlying problem is still with us--what we have to do now is focus on how to get to this issue of affordability."

But the industry that Ignagni represents is the "underlying problem"--and as long as health care is a commodity that industry controls, it will be unaffordable for millions of Americans. The fight for a health care system that covers everyone is far from over.

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