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Life Health > Health Insurance > Health Insurance

On the Third Hand: The boy who cried rate shock

By Allison Bell

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One of my biases about the Patient Protection and Affordable Care Act (PPACA) is that I think the government has a role to play in health care finance, but I’m not sure what. (And I’m open to giving, say, Texas to pure free-marketers, to see how an Ayn Rand Objectivist Health Care Non-System would work.)

I think people on all sides of PPACA issues are making great arguments about why the law as a whole and various parts of the law will or won’t work.

I think that a majority of the people on all sides who send me e-mail are intelligent and well-meaning; that the people who loathe PPACA are kinder than the PPACA backers realize; and that at least some of the PPACA backers and implementers know more about the nuts and bolts of health care finance in general and private health insurance in particular than the PPACA loathers realize.

In a perfect world, I’d like PPACA to materialize in several different universes at once, including one in which PPACA comes to life exactly as written, so that I can see how it actually works; one in which it simply disappears; one in which it comes to life and works great, so that the people who love it can celebrate; and one in which it comes to life and works especially horribly, so that the people who hate it can hold hands, form a big circle around Washington, D.C., and chant, “I told you so!” 

In other words: I want all of you readers to be conscious in a universe in which you get to be right.

One thing I dislike is when I see interested parties undercut their own arguments by, in my opinion, presenting the arguments or supporting data in a way that seems overly emotional or slanted.

To me, it seems as if this has been happening a lot in PPACA supporter arguments about why PPACA won’t increase health insurance premiums all that much, and in PPACA hater arguments about why PPACA will immediately turn all known private health insurance into high-energy plasma particles, and possibly destroy the surrounding bedrock.

For me, one example of a group that’s presented PPACA rate effect analyses in a reasonable way is America’s Health Insurance Plans (AHIP). AHIP recently distributed a report by Milliman that shows that PPACA could lead to big increases in health insurance rates for young men, especially, and decreases for some older consumers.

In commentaries, AHIP emphasized the bits of data illustrating how PPACA might increase premiums for some, but the Milliman analysts who prepared the report explained how they got their data reasonably clearly and seemed to present full sets of data. A reporter could analyze the data from a different perspective and possibly use it to address questions that the people at AHIP and Milliman had not considered.

The House Energy & Commerce Committee has, in my opinion, just put out a PPACA rate effect report that’s less effective than it could have been.

The staff of the committee clearly did a lot of work. They sent 17 insurers letters asking very reasonable questions like this:

Since the passage of the PPACA, has your company done any analysis of the effect of the  law on premiums generally, including analyses on the effect of the PPACA on premiums  in the individual market, the small group market, or large group market, either nationally  or by State? If so, please provide any documents setting forth this analysis. 

The staff even posted a lightly redacted version of each company’s complete response on the Web.

The House staffers who wrote the report conceded that insurers had suggested that PPACA could lower premiums in five states that already impose tough pricing and underwriting restrictions on health insurers.

But the staffers present bits and pieces of data, in a way that makes it hard to tell whether the staffers are giving a full, fair summary of reasonably even-handed responses or simply cherry-picking the data that makes PPACA look as bad as possible.

The staffers write the following about the Pennsylvania individual market:

One insurer predicted an average increase of 30 percent for  the individual market. Another predicted that males could face premium increases ranging from  11 percent to 63 percent.

In other words: Two of the insurers think rates could go up a lot for some or all consumers in the individual market. But what about the other insurers? Did they say rates for individuals would go up, go down, or dance in figure eights around the sky?

House committees have held some really great PPACA hearings over the past few years that should have provided food for thought for even the most ardent PPACA supporters, but, in this report, it feels as if House Republicans are crying about the wolf making the sky fall down for the 70th time. Maybe the PPACA wolf is out there, and maybe the wolf will make the sky fall down, but House Republicans have screamed about the wolf making the sky fall down so often that it seems more like a mantra than a prediction.

The insurer response exhibits are somewhat more interesting, but they also suffer from the lack-of-context problem.

Insurer C has provided attractive charts showing how many different PPACA provisions could affect 21-year-old males, 40-year-old males and 60-year-old males in a number of different states.

Insurer C has shown, for example, that, even after adjusting for PPACA premium subsidies and other PPACA subsidies, PPACA could increase  out-of-pocket costs in the individual market by 66 percent for a 21-year-old, 58 percent for a 40-year-old and 49 percent for a 60-year-old.

But Insurer C hasn’t given any figures for women in Colorado. Could it be that women will pay about what the men will pay, or a lot more? Or, could it be that PPACA will cut their premiums, and Insurer C left that data out because it wanted to make PPACA look bad? It’s hard to tell.

Insurer C has also indicated that, in California, most of the increase in rates comes from the PPACA provision requiring insurers to cover sick people and charge sick people the same rates that healthy people pay.

On the one hand: That could be annoying for young, healthy guys.

On the other hand, if an insurer really included a warning — in big, colorful type that a young, healthy, harried guy would actually read — and the warning said, “We will only insure you when you are young and healthy; if you actually get sick, we will jack up your rates till you cry like a baby, give up your coverage and start using the clerk at the juice bar as your primary care provider — what percentage of young, healthy guys would really want that coverage?

On the third hand: Maybe what the real underlying message of the rate data that the committee staffers collected could be — if the data were presented in a more complete way — is that most of us other than the health insurance actuaries and underwriters — even, by and large, most Republicans — are a bunch of cowards who are hiding behind a fig life of innumeracy.

We want to pretend that we care deeply about the health of sick people who aren’t related to us, and will pay anything to make them better and avoid rationing care.

Remember, in 2009: Even the last-minute Republican alternative to the bill that became PPACA included a provision that would have banned the inclusion of lifetime benefits limits in health insurance policies.

The Republicans have been hammering the Democrats relentlessly based on the idea that any Democratic-developed program that tries to evaluate the cost-effectiveness of care amounts to a “death panel.”

But, when push comes to shove, we don’t really have any idea about how we’ll pay for sick people. Maybe we talk about “state risk pools” — which, to be sure, may be better run than alternatives such as the ill-fated PPACA risk pool, but the risk pool programs often ration access to coverage by subjecting applicants to long waiting lists or imposing tight limits on benefits, or by imposing other program limits that, in effect, use red tape and obscure benefits limits to ration care.

Maybe one topic to discuss, in some serious, non-partisan way that probably isn’t actually possible is this: “If we take the cost of caring for the 5 percent of the population with the highest claims, and we spread that amount across the entire U.S. population using the PPACA guaranteed-issue and community-rating rules, what’s the maximum impact on the annual premiums for a young, healthy, unsubsidized male that we’re willing to tolerate?”

Whatever answer we come up with, whether that answer is 20 percent, 200 percent, or nothing, might be a place to start serious conversations about how much we’re reallying to help sick people, through a subsidy program that’s based on honest, consistent rules, rather than a cowardly system based on sneaky rationing through confusion, long waits and unpredictable red tape. 

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