Reform won't end cherry-picking by private insurers

All of the health care reform bills under consideration in Congress would prohibit insurance companies from refusing to cover people because of prior health problems. "Guaranteed issue" is the wonky name for this ban on discrimination because of pre-existing conditions. Unfortunately, various economists and health care experts told David Hilzenrath of the Washington Post that "simply banning medical discrimination would not necessarily remove it from the equation [...]."

If insurers are prohibited from openly rejecting people with preexisting conditions, they could try to cherry-pick through more subtle means. For example, offering free health club memberships tends to attract people who can use the equipment, says Paul Precht, director of policy at the Medicare Rights Center.

Being uncooperative on insurance claims can chase away the chronically ill. For people who have few medical bills, it is less of a factor, said Karen Pollitz, research professor at the Georgetown University Health Policy Institute.

And to avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania's Wharton School. [...]

America's Health Insurance Plans, a lobbying group for health insurers, has endorsed the idea of guaranteeing individuals access to coverage regardless of their medical history -- if that guarantee is part of a larger plan to help the uninsured pay for coverage and bring everyone into the insurance market.

At a more nuts-and-bolts level, AHIP has been trying to shape the legislation in ways that could help insurers attract the healthy and avoid the sick, though it has given other reasons for advancing those positions. In a recent letter to Baucus, AHIP President Karen Ignagni said benefit packages "should give consumers flexible options to meet diverse needs."

If the final health care reform bill has no public health insurance option, many chronically ill Americans are likely to be left outside the system as insurers find new ways of denying coverage or dropping policy-holders.

Even if the final bill includes a limited public option, cherry-picking by private insurers could set up the public plan for failure. President Obama has endorsed the idea of making the public option available only to people who are currently uninsured, meaning it will serve a disproportionate number of chronically ill people. That will drive up costs of operating the public plan.

I don't have an answer for this problem, beyond feeling depressed that corporate groups like AHIP have so much sway with Congress. If Americans with prior health issues are still facing discrimination after Obama signs what he claims to be sweeping "health insurance reform," the political backlash against Democrats could be severe.

UPDATE: MyDD user Bruce Webb wasn't impressed by Hilzenrath's article. I've posted his rebuttal after the jump.

MyDD user Bruce Webb's comment on Hilzenrath's article:

Clearly the guy hasn't read the bill.

First no bill proposes to limit coverage in the individual market to the uninsured. This seems to come from not understanding the 'Transition' section which phases employer access to the exchange and the provisions which in most cases require covered employees to accept employer plans.

As far as gaming the system to limit specialists in chronic illness that it is regulated by provisions of Sec 115.

And most importantly Sec 116 makes selectively gaming the risk pool counterproductive, you can't make money if you just insure healthy people because you won't meet your minimum Medical Loss Ratio.

Dingell, Waxman et al are not dummies, they systematically blocked most of the paths that allowed cherry picking and denying care to determine profit levels. You can bet the house that the core drive among the insurance companies is to gut Secs 111-116 of HR3200 because if they make it into the final version of the bill the kill most of the adverse scenarios that people are posing.

Sec 116 (a) is huge, the two most important sentences in the bill. Yet one whose significance seems to have been overlooked by everyone. Although you can bet the insurance has a bull's eye on it. They are openly trying to attack Sec 113 which sets rating rules, but they hate 116 which directly regulates profits. Though of course the bald words 'profit controls' appear nowhere, Dingell et al being more savvy than that.

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