The health reform legislation currently being crafted on Capitol Hill is undeniably complex. To oversimplify slightly it can be boiled down into four parts: coverage (subsidies for private coverage and Medicaid expansions); delivery and payment reforms; insurance market reforms and regulations; and prevention, with each broad category containing a range of specific policy proposals and ideas.
There’s been a lot of discussion so far about coverage expansions and how to pay for them, as well as delivery and payment reforms aimed at “bending the curve” of health care costs over time, including a hot debate lately about whether or not a public insurance plan should compete with private plans. But the idea of making the health insurance market work more fairly, particularly for sicker and older consumers, has not received commensurate attention. Steps currently being discussed include:
- Requiring insurers to take everyone, including those with pre-existing health conditions.
- Eliminating premium markups based on health status.
- Minimizing premium variations based on age.
- Capping how much insurance companies can spend on administration and profits.
- Standardizing coverage at different levels and ensuring that all plans cover a range of benefits, making it easier for consumers to compare plans.
These changes would all apply to people buying insurance on their own in so-called “exchanges,” and possibly to small businesses buying coverage for their workers as well.
Insurance market reforms are quite possibly the least controversial of all the issues in health reform, which is maybe why they’ve gotten less attention. But, they may also be the sleeper in the debate, at least for the public. Why is that?
First, they directly address some of the biggest insecurities people have about health care, particularly in the current economy with millions losing their jobs and likely their health coverage as well. The predominant source of health coverage today, and likely after reform too, is through employers. But, a surprising number of people have, at some point in their lives, shopped for insurance directly from an insurer — 41% of all adults in a survey we did last year. Depending on how a new system is set up, 40 million or more people could end up getting insurance through exchanges and be protected by new insurance market rules, and many more over time as people cycle in and out of different parts of the insurance system.
More than any other single factor, it is the problems the insured have paying for health care and their worries that these problems will worsen that have put health on the agenda with new political traction. In a study we did with the American Cancer Society, for example, we found that even having private insurance didn’t protect cancer patients from high out-of-pocket costs, leading in some cases to bankruptcy and delayed or foregone care.
Second, changes such as eliminating medical underwriting have appeal across the political spectrum. We poll on all kinds of policy options at Kaiser, and this is one of the few that garners majority support from Democrats, Independents, and Republicans. And, in the example of eliminating underwriting, it maintains broad support even after we tell respondents that healthier people may end up paying somewhat more so that sicker people can pay less.
Third, there is one special attribute insurance market reforms have: they have almost no impact on the federal budget. With paying for health reform looming as perhaps the biggest challenge, this is a feature worth its weight in gold. (Though before anyone gets the idea that doing insurance market changes and establishing exchanges is a simple incremental step, it’s important to remember that these reforms are tough to make work without adequate subsidies and a requirement that everyone be covered.)
I offer no judgment in this short column about the individual insurance market reforms now being proposed. They are not all equally meritorious, and some involve tradeoffs. By the same token, others not on the table now could also be considered; for example, requiring health insurance companies to be more transparent about their premium increases and to justify them, in writing, to their customers (employers and individuals). Even without limits on premium increases, which were proposed in the Clinton health reform plan but are not on the table now, greater public accountability and transparency could go a long way.
What is clear is that when people with insurance now struggling to pay their health care bills see health reform legislation and ask “How will this help me and my family?” there will be nothing else that so quickly and understandably addresses people’s concerns about security and peace of mind than one of the least discussed elements of the legislation — insurance market reforms. Policymakers might consider doing more in this area and finding ways to communicate about it more effectively. Is there an Insurance Bill of Rights lurking inside today’s health reform legislation?