By Bill Boyarsky
Overwhelmingly negative comments greeted my recent column blasting Howard Dean and other liberals who opposed the Senate health reform bill. But amid the abuse heaped on my old gray head were a couple of constructive, intelligent comments nailing one of the great weaknesses of the bill: It’s a giveaway to the insurance companies.
One reader, Lesley Palmer of the Southern California community of Los Alamitos, said, “We will be forced to buy insurance from the same greedy bastards who have pillaged the American public for over 40 years and who now will be guaranteed 30 million new clients.”
Rhuen Phreed of Boston warned that those who can neither afford to buy mandatory insurance nor pay the fines will be the targets of a “booming collection industry, which seeks to collect on debt taken out by the mandated citizen to pay for ... required insurance . ...Yes, let’s all watch for all those jobs that will be created in the insurance penalty collection industry. ...”
From the beginning, the insurance companies have been a huge force—probably the most powerful—in shaping health care reform legislation. Their influence will continue as members of the Senate and the House begin the closed-door negotiations that will result in a final bill.
The final bill will have a great impact, requiring most Americans to buy health insurance. It’s a bill badly in need of strengthening, and you can read all about its faults in the reader comments attached to my earlier article and elsewhere. Still, there’s a lot of good in it, even as it stands now.
One of the insurance companies’ most heartless and profitable practices, refusing policies to those with pre-existing conditions, would be stopped. Such people could buy insurance from “high risk” pools, with premium prices limited by the government. In the House bill the provision would go into effect upon enactment, and in the Senate version it would be activated 90 days after the legislation was signed. It would continue until insurance exchanges—marketplaces where consumers could buy policies—went into effect in 2013 under the House bill or 2014 under the Senate’s. The exchanges would ban abuses in cases involving pre-existing conditions.
Beginning six months after reform was enacted, insurance companies would be prevented from imposing lifetime or annual limits on benefits and they would not be able to rescind coverage except for fraud or “intentional misrepresentation.” The legislation would also begin to close the “doughnut hole” in Medicare drug coverage beginning in 2011. In that same year, insurance companies would be required to spend most of their revenue on health care rather than administration and advertising. This important restriction is aimed at limiting profiteering.
Both the Senate and House bills would extend Medicaid to the working poor, now forced to seek care in emergency wards or community clinics. For example, a family of four headed by a 45-year-old with an income of $28,000 a year would be eligible for Medicaid. The program is now limited to the extremely poor, the blind, disabled and those in a few other categories.
When the exchanges began operation, the insurance situation would improve markedly for the millions not covered by employer insurance and now forced to shop for usually high-priced individual policies.
The Kaiser Family Foundation’s online health reform subsidy calculator shows that a family of four headed by a 45-year-old earning $48,000 a year would receive a $9,974 subsidy toward a policy costing $13,295 from the exchange. The same family with an income of $78,000 a year would get $5,651 to help pay for its $13,295 policy.
The delay in opening the exchanges is a deficiency in both the Senate and House bills. The much-heralded promise of reducing the number of uninsured by 31 million wouldn’t be met until 2019. Even then, 23 million people under 65 would remain uninsured, about a third of them illegal immigrants, according to the Congressional Budget Office’s Dec. 19 report to Senate Majority Leader Harry Reid.
There are other faults. For example, it’s unclear how the new laws and regulations would be enforced.
The proposals lack the broad coverage, simplicity and efficiency of Medicare for all, the single-player plan. The Senate’s decision to drop a public plan from the exchanges was a big disappointment. “The disappearance of the public option says that the private insurance companies won,” Dr. Abraham Verghese wrote on the Atlantic’s Web site. “Yes, I know they will be forced to rein in costs, to not deny coverage and so on. But a public option would have put the real squeeze on them.”
Consumer Watchdog, an organization fighting for more regulation, notes that a loophole in the Senate bill would give leeway to the big insurers in raising rates. The legislation does this by permitting the companies to impose so-called reasonable rate increases. Jerry Flanagan of Consumer Watchdog warned that most Americans would be required “to buy health insurance without adequate constraints on what insurers can charge for coverage.”
The watchdog organization also criticized a provision that would allow the companies to issue policies from states with minimum regulation. Companies would shop for states where maternity care, reconstructive surgery after cancer and even HIV/AIDS testing are not required to be covered. These policies would be sold around the country.
It will be tough to beat the insurance companies. The Center for Responsive Politics revealed the depth of their penetration into the ranks of Democratic and Republican senators in a study released on Christmas Eve, the day the Senate passed the bill.
In campaign contributions from January to September, Republican Sen. Chuck Grassley, one of the leaders in the fight against the reform legislation, received $80,650 from health insurers, more than any other senator. But the Democratic architect of the Senate bill, Reid, wasn’t far behind with $65,550. Liberals Patty Murray of Washington, Charles Schumer of New York and Chris Dodd of Connecticut were also among the top 10 Senate recipients of health insurer contributions, as was Blanche Lincoln, the Arkansas Democrat who was one of those who forced liberal colleagues to weaken the bill.
The insurance companies have had too good a deal for too long. President Barack Obama will—or should—have the biggest voice in the final negotiations. It’s up to him to stop big insurance and improve this legislation.
Bill Boyarsky’s latest book is “Inventing L.A.: The Chandlers and Their Times,” based on the film of the same name by Peter Jones. It was published in September by Angel City Press.
White House / Pete Souza