"The Uninsured" Aren't "Them"...They're Us...

A report by the Commonwealth Fund should serve as a reminder that "the uninsured" are not a single population, but instead a diverse group of individuals who, for many different reasons, share one thing in common: for some period of time, they lack health coverage. And when that happens, they're often on their own...not in the "rugged individualist" or "free rider" context often suggested by their critics, but because they're essentially frozen out of the market by current "pre-PPACA" industry practices.

More information on the complete study is available here:http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Apr/Gaps-in-Health-Insurance.aspx

Commonwealth's study of over 2,300 individuals found that twenty-six percent of Americans went without health insurance for some period of time in 2011. And for the most part,those without coverage lost it because they'd lost their jobs.

Seven out of ten of those who lost their employment-based coverage were uninsured for more than a year. There are a number of reasons.

Because the continuation of coverage provisions under COBRA are mandatory only for companies with more than 20 workers (and often COBRA administrative services aren't available to groups with fewer than 20 employees), one reason for the coverage gap is that a continuation of employer-sponsored coverage isn't available to them at any price.

And even for COBRA-eligible employees, the cost of continuing coverage under COBRA, at the employer's cost plus two percent, makes it too expensive for families whose earning power has already been undermined by a layoff.

The individual market is no solution in most states. Individual policies tend to cost more, and cover less, than do group plans. And because most states still permit insurers to deny applicants for individual coverage due to health concerns, forty-five percent of those who applied for non-group coverage couldn't find any at an affordable cost.

For those who have the money, but are shut out of the market due to health, high-risk insurance pools can be a partial solution. Some states, and the federal government, operate plans to provide subsidized coverage for those with pre-existing conditions which make them ineligible for commercial coverage. The Federal government recently reported that over 50,000 Americans had enrolled in its temporary Pre-Existing Conditions Insurance Plan (PCIP) in its first 18 months of operations.

Participants in the PCIP rang up some $1.45 billion in health costs, largely for big-ticket items such as cancer and COPD. The plan's participants' costs averaged nearly $29,000 per person, and required a direct federal subsidy of some $600 million to augment what they'd paid in in premiums.

Looked at in another way, given that the current average per-employee cost of health coverage is about $13,000 per year, each participant in the PCIP requires at least one premium-paying adult to utilize nothing in order to create a subsidy for one PCIP participant.

In an earlier article (http://polkiananalysis.blogspot.com/2012/02/one-percent-most-of-us-are-headed-for.html), I pointed out that it takes six people paying premiums and using zero coverage to subsidize the costs on each member of the country's one percent of highest utilizers of health services. And it takes three healthy Americans to subsidize the costs of the next highest four percent of utilizers.

In "the olden days," health care coverage was sold on a "community-rated" basis, with an explicit understanding that those who didn't use a lot of health coverage would be paying a little more for their coverage so that those who really needed it could pay a little less.

The market has "evolved" to a point at which sharp dealers in the insurance business have convinced us that the insurance market is an "everyone for himself" market, in which we should pay for what our own coverage costs, with no sense of responsibility for the "community" in which we live and work. And, of course, many insurers have made a tidy buck by finding ways to avoid covering individuals whose needs would require more of a subsidy than their own premiums could cover. This sort of "precision..." dividing up the underwriting world into universes of one...has neither moderated health premiums for everyone nor made coverage more accessible to those who need it.

Instead we've created "ghettos" in which these "high-risk" individuals either receive crappy coverage at high costs, or are forced to do without.

And we demonize "the uninsured" as freeloaders who take advantage of "us..." a classic gambit of "blame the victim."

But increasingly, the uninsured aren't "them." They're us...our neighbors, our family members, our friends...and their families.

I can't speak for the big thinkers, but Ive had the experience of being without work, and of being expected to find $1800 a month for health coverage which my insurer initially offered me for $600 a month, till they found out I had a little high blood pressure and asthma.

It was agonizing to go without, but the monthly premiums were the equivalent of a monthly mortgage payment. We prayed every day that we'd remain healthy, and that our kids wouldn't break a leg playing soccer.

I didn't feel like a freeloader. I was terrified for my family. We were very close to the edge, and a single significant health problem would have driven us into the 40% of Americans whose bankruptcy filings are due to health care expenses. But our insurer's position was, "It costs what it costs. Take it or leave it."

We were lucky to find a job with employer-sponsored benefits eight months later.

I'll never forget that terrible time. But for most of The Deep Thinkers, with their comfy jobs and generous health benefits, that'll probably never be a worry. That makes it easier for them to think of the uninsured as "them."

Maybe a year or two without health coverage for all members of Congress would remind them that they're one of us.

"Shared Responsibility" Premium Hike Effective In Ohio Today

Here's how easy it is for the government and the insurance industry to spend your money to solve their problems.

Today, the State of Ohio institutes a 4% increase in the cost of individual (non-group) health plans to subsidize the cost of similar plans for people with pre-existing health conditions.

Ohio insurers are required by law to offer "open enrollment" health plans to indviduals with pre-existing health conditions which might disqualify them from conventional health insurance coverage. The plans are quite costly; individuals covered under the plans spend an average of $800-850 per month for coverage, well over twice what healthier people pay for similar coverage.

The plans are also hard to find. Insurers are required to offer them to the public only one month per year, and there's no standard for informing the public (usually you'll find a box in the classified section).

For both these reasons, not many Ohioans participate in the plan. Only about 1,300 out of Ohio's million or so uninsured residents have signed up for them.

The State budget passed in July sought to create a subsidy for open enrollment participants by assessing a 5% rate increase on all health plans sold in Ohio, including small group health plans. That would have created a huge windfall for insurers who sell non-group plans, in exchange for solving a problem for only a relatively few people.

The Ohio General Assembly eventually abandoned that approach, choosing instead to focus the premium surcharge on individual health plans. (It's not clear that a similar effort to hike small group premiums could have stood up to constitutional review, but individual health plans are at the Legislature's mercy).

So the Ohio Department of Insurance has been given an "oversight" role, to monitor rates and report back to the Governor. Ostensibly, if overall rates in the individual market rise more than 5 1/2%, the Department will scale back on the subsidy for open enrollment plans. Translation: if so many sick people sign up for subsidized coverage that it drives rates up, the Insurance Department will use pricing to slow down the rate at which they sign up.

This is a sign of things to come. When insurers tell legislatures, as they've told the White House, that they'll gladly stop rejecting applicants with pre-existing health conditions as long as everyone must buy health coverage, what they're generally NOT saying is that the cost of that largesse will be paid for by raising rates for everyone else...all in the name of "shared responsibility." But the REAL effect is to provide insurers with a subsidy enabling them to sell more individual health policies. And eventually, the price won't matter, because the law will require everybody to buy a health plan, no matter what it costs.