Without a public option, the signature achievement of health care reform is supposed to be new consumer protections that would force the insurance industry to actually pay claims.
But if the final reform bill winds up looking more like the Senate bill than the House bill, those protections will be easy for insurers to work around in the new insurance exchanges, Rep. John Garamendi (D-Calif.), health policy experts and former industry insiders told reporters on a conference call Tuesday.
"Under health reform, 30 million people will buy their insurance through the exchanges. I spent years as insurance commissioner in California, chasing after the insurance company scoundrels. You're going to toss 30 million Americans to these sharks unless there is a real strong regulatory environment and public option," Garamendi said.
Though the public option isn't going to happen, consumer-protection advocates point to four other major problems with the health care bill passed by the Senate on Christmas Eve. In contrast to the House bill, it leaves the states in charge of setting up individual exchanges. It provides little in the way of federal money for enforcement. It includes a loophole that would allow insurers to penalize people who don't take advantage of available wellness programs or meet related goals, like weight loss. And it completely exempts businesses with more than 100 employees from the new consumer protections, meaning that roughly half of the 160 million Americans with employer-based insurance will still be vulnerable to preexisting conditions and all other kinds of predatory practices.
The rest of the country will be just as vulnerable if reform lacks clear, strong federal enforcement, said Michael McGarvey, a retired chief medical officer for Horizon BlueCross BlueShield of New Jersey and a former New York state regulator. "As a former regulator, I can just tell you that simpler and unified is better than diverse and complex," McGarvey said. "I think the simpler we keep this, the more straightforward we keep it, the less the opportunity for the insurance industry to game it to death."
To keep things simple, a House-style national exchange is the way to go, said Karen Pollitz, a director of Georgetown University's Health Policy Institute. Under the House language, insurers would have to bid their prices lower to join a more selective marketplace, in which the terms of their coverage are laid out in clear language and have been certified by the federal government.
Plus, all the federal money allocated for subsidies and tax credits to low-income Americans being forced to buy health insurance is going to flow through the exchange -- or, under the Senate bill, the 50 state exchanges -- so either way, the exchange system would be a ripe target for industry abuse if not closely monitored.
"All of this needs to work well for reform to achieve the goals that we want," said Pollitz. "And so I think for that reason the House approach to establishing a federal exchange where we can build it right the first time and get it done is very important, as opposed to just kind of throwing up a jump ball and letting 50 different states figure out all different ways how to make it work."
The House language allows states with strong regulatory and enforcement frameworks to take over responsibility for their exchanges, but those states that have a ways to go aren't likely to get there in the near future. Part of the problem with leaving things to the states, McGarvey and Pollitz said, is that the states are broke, and the Senate bill does little to help them fund enforcement.
Another problem, said former CIGNA communications chief Wendell Potter, is that the insurance companies have their hooks just as deep in state governments as the U.S. Congress, if not deeper.
"The insurance companies have long decried what they refer to as a 'patchwork' of state regulatory systems, but they have benefited from that patchwork. In many states they have developed very cozy relationships with insurance commissioners and staff. They've been able to get permission to market plans that continue to shift more and more of the economic cost, or the cost of health care, from them and employers to consumers," said Potter, now a fellow at the Center for Media and Democracy. "So it's vitally important that the federal government play a significant role in this legislation, that the exchange be a federal exchange, and that the federal government play a very strong role in regulation, and that the federal government provide resources to -- you've got to make sure the regulations are enforced."
Even robust enforcement couldn't touch insurers who exploit the huge loopholes in the Senate bill, however. The Senate language allows insurers and employers to penalize customers and employers who refuse optional health screenings or exercise programs, as well as those who attend but fail to meet targets for weight loss, blood pressure or cholesterol reduction or other benchmarks.
" So now instead of being able to charge people more because they're sick, insurers will charge them more because they're not well. And now, instead of calling those people victims of discrimination, we'll say it's their fault. And I think that is a very dangerous loophole in a reform scenario where people have to get insurance and continue to be victimized by discrimination," said Pollitz. "It's really just medical underwriting by a different name," McGarvey said.
The wellness exceptions are "extremely important" to the insurance companies and their lobbyists, Potter said, as is the provision that allows insurers to charge older customers more than younger ones. The House bill allows them to charge older people twice as much; the Senate bill, three times as much. "They're quite willing to live in a world in which they can no longer use preexisting conditions to deny people coverage, but they want to make sure that on the other hand, under this legislation they'll be able to charge certain people a lot more than others, based on their age, based on their current health or their past health, and where they live," Potter said.
And while some of the reforms apply across the board in both bills -- an end to lifetime caps, for example, and discrimination based explicitly on preexisting conditions -- the lack of regulation for companies with more than 100 employees leaves plenty of avenues for insurers and employers to deny coverage. "It would still be possible for a large employer, whether or not they self-fund, to sponsor a plan that doesn't cover the drugs that you need for your preexisting condition," Pollitz said. The ban on caps, after all, applies only to covered benefits. "So I think it's very important in health reform and for pooling for consumer protection, for all the rules to work together and be tight," she said. Otherwise, "there would still be ways to design policies that would make it very difficult for people to get their claims paid when they get very sick."
The House bill would do a much better job in each of these areas. However, it's not clear how many of them the Senate will give ground on. Garamendi said House Democrats will keep pushing, but a single conservative Democratic senator has the power to tell them when to stop.
"I think we're going to win this day," Garamendi said. "The role of the federal government is to provide a national market, to provide assurance that the policies that are sold on that exchange are valuable, that the benefits will be paid when they are due, and that the companies obey the rules."