Public Policy

Summit to Somewhere


Whether pure political theater or a real attempt at bipartisanship, the Feb. 25 healthcare summit was a milestone on the way to March’s riveting Congressional vote in favor of healtcare reform.

Both parties arrived with some newly dusted off—or slightly tweaked—ideas to throw into the mix, in part to give voters the impression that they knew best how to move forward with healthcare reform. In the end, the legislation that narrowly prevailed March 20 incorporated some of those ideas while dumping or reshaping others (items in the reconciliation bill weren’t finalized at press time).

The fight isn’t over, however, and we are likely to hear the same dueling themes again: more federal government intervention versus more market-driven solutions for addressing access and cost. Most of the ideas influence hospital care, frequently cited as one of the most expensive sectors of healthcare. Here’s a look at key proposals that rose to the top of their parties’ wish lists in February, and how they fared in March.

If insurance companies set up shop in the states with the lowest level of regulation … younger and healthier adults would migrate to those cheaper plans, leaving the older and sicker adults who really need healthcare in plans with the strongest consumer protections.

Idea: Allow People to Buy Health Insurance across State Lines

Although not new, Republican legislators revived the idea bandied about during the Bush administration, and made it a key element of their alternative to the Democratic plan. Ultimately, it would hold insurance companies accountable through robust competition, but without a “federal bureaucracy,” Rep. Marsha Blackburn (R-Tenn.) said at the summit. With competition fueling reduced insurance premiums for consumers, the argument goes, the number of insured increases.

Michael Cousineau, an associate professor of research at the University of Southern California and a specialist in health policy and health services, isn’t having it. “I think that it’s a stupid proposal,” he says. First, he argues, it’s not practical for someone in California to buy a policy from Mississippi. If a consumer has a problem with an out-of-state health plan refusing to cover care, he asks, “who are you going to complain to?”

If insurance companies set up shop in the states with the lowest level of regulation, he says, younger and healthier adults would migrate to those cheaper plans, leaving the older and sicker adults who really need healthcare in plans with the strongest consumer protections. “So you’ll end up with this massive problem of sick people in some plans and well people in the other plans, and it’s just going to create havoc. I don’t think it’s a sustainable mechanism,” he says. Doctors, hospitals, and even insurers themselves would hate it, he says, because of the massive influx of out-of-state insurance companies.

Democrats, including Oregon Sen. Ron Wyden, introduced their own version of the proposal, but on a more regional level and with more rigorous oversight. Currently, insurance plans must meet the requirements of the states in which they’re sold. But states have incredibly varied mandates about what kind of healthcare must be covered. “If you permit the interstate sales of insurance under the current plans, then more or less all of those state rules go out the door,” says Leighton Ku, a health policy analyst at George Washington University. Although sidestepping state-specific regulations would permit people to buy insurance from the state with the cheapest plan, he says, “in many cases, that would be because the state has the fewest restrictions on it.”

And therein lies another big concern, he says: “That it essentially begins to create a race to the bottom.”

At the summit, President Obama supported selling insurance across state lines, but through a national exchange with at least “minimal standards” through which any insurer could participate.

Ultimately, the new legislation will allow states to form exchanges, but with an option for regional exchanges as well.

Idea: Create a Health Insurance Rate Authority

Championed by Obama, this proposal arrived on the heels of several high-profile rate increases that have generated considerable public angst. Not coincidentally, the House Energy and Commerce Committee held a hearing about soaring premiums the day before the summit.

At the hearing, legislators questioned Wellpoint president and CEO Angela Braly about the company’s Anthem Blue Cross unit and its plans to raise insurance premiums by as much as 39% for some Californians (overall, premium increases average 25%). Braly, in turn, blamed the surge on rising and “unsustainable” pharmacy and hospital care costs, the latter driven primarily by hospital reimbursement rates.

Although the general concept of federal oversight is useful, Ku says, the big question is one of authority. Regulating insurers has traditionally fallen to state governments, which likely will be reluctant to give up jurisdictional power but might accept federal assistance.

“I think in general it would help, but I don’t think it’s going to have as much of an impact unless we control the cost-of-care downlink,” Cousineau adds. Including a mandate for individuals to buy health insurance reduces the need for the authority, though he concedes that some cynics doubt whether health insurers will voluntarily lower rates even if more young, healthy people buy policies. Republicans oppose the idea of an individual mandate and a new federal regulatory entity.

In the March bill, the individual mandate prevailed while the idea of a new insurance watchdog fell by the wayside.

Idea: Provide State Grants to Expand High-Risk Pools for Uninsured

The idea, proposed by Republicans in several iterations, including Sen. John McCain (R-Ariz.) when he ran for president, was offered as a potential alternative to banning insurance companies from denying coverage to patients with pre-existing conditions. Many states already offer high-risk patient pools for patients who have been excluded from the private market, but some have long waiting lists. The Health Insurance Plan of California (HPIC), for example, has a two-year wait, according to Cousineau.

“It’s not a bad idea,” he says of a federal subsidy, but because the pools only include high-risk patients, he says they won’t solve the problem of expensive premiums. Cousineau prefers state-based exchanges that aren’t segregated by risk and spread the cost over a wider range of people, which is included in the March bill. “Otherwise, it’s too expensive, and you’re asking the states to pay for part of it,” he says.

Ku believes high-risk pools could deliver some relief to patients currently priced out of the market. “It’s not going to help the neediest of the needy, but could help some,” he says. As a temporary fix, the new legislation sets up high-risk pools in states that lack them, with $5 billion from the federal coffers. The mechanism will be phased out in 2014, however; by then, all insurers will be banned from denying coverage to anyone.

Idea: Gradually Close the “Doughnut Hole”

An idea popular with senior citizens, closing the gap in Medicare’s Part D prescription drug coverage gained further traction under Obama’s healthcare plan and was included in the healthcare reconciliation bill. The doughnut-hole closure is paid for with savings from cuts to the Medicare Advantage program.

Experts question whether it will affect as many patients as has been widely assumed. “I think it’s an important thing to do,” Cousineau says, “but I’m not as worried as much about the costs there as I am in other parts of the program.”

Uncertainties aside, closing Medicare’s doughnut hole could help ease at least one headache cited by hospitalists: struggling to sort through hospitalized patients’ formularies to insure they can afford the drugs they need upon discharge—so they won’t end up back in the hospital. TH

Bryn Nelson is a freelance medical writer based in Seattle.

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