Thursday, September 23, 2010

Musing on Health Care

One of the provisions in the new health care bill that kicks in today is an end to the lifetime cap on benefits.  As a state employee I have a plan that has such a limit but I also have an annual open enrollment period in which I am allowed to switch to another plan offered by the state benefits board.

So I have always wondered - if I get close to my lifetime benefit on one plan, can I then switch to another and start over again at zero?

This question will soon be moot, but does anyone know the answer?

In a related development Regence has decided to stop offering children's stand-alone health plans.  From the linked Oregonian article:

Insurers that have discontinued child-only coverage say the new health reform law has set the stage for large and unpredictable medical costs. Now that coverage is guaranteed regardless of health, insurers say too many families may wait until their children are sick to buy health insurance. Insurers need enough healthy enrollees to pay premiums to cover the costs of enrollees who are sick.

Which was always the point about mandating coverage - if you prohibit insurance companies from screening based on pre-existing conditions then people can just wait until they are sick to enroll which raises costs, and thus premiums for everyone.  Democrats are using the threat of excluding companies that don't cooperate from participating in exchanges, so far this threat is not working.  One suspects that insurance companies are trying to use actions such as this for more negotiating leverage, but is going to be an interesting ride for a while.


jessibeaucoup said...

There are people with expensive diseases who have to switch jobs every couple/few years just to avoid the caps.

I can only hope that the insurance companies mess around with the rules enough that people can see why we need the elimiate the profit motive from health care entirely.

BJCefola said...

In writing about health care reform, I see a lot of emphasis on the concept that people will wait until they (or their kids) are sick before they buy coverage. I think that misses something. The assumption is that a lot of relatively high cost individuals will now buy coverage, as previously they were excluded by underwriting guidelines. Two things can happen: Prices can go up, perhaps significantly, or a new pool of low cost individuals can buy coverage and bring the overall cost in line with where it is now. That these are “new” buyers deserves emphasis as these are presumably individuals who could buy coverage now and choose not to. The concern of insurance companies is that regulatory pressure won’t permit rate hikes (and they’d likely trigger adverse selection if they were approved) and new low cost buyers won’t show up.

Talking about people gaming the system makes it sound like a morality play, that isn’t really the issue. What it comes down to is that costs will likely increase and insurers need someone to pay for it.