Six Things Elizabeth Edwards Doesn’t Know About the Health Care System
According to Elizabeth Edwards, the wife of former Democratic presidential contender John Edwards, neither she nor John McCain would be able to get health insurance under Sen. McCain’s health plan. He, because he has been treated for melanoma. She, because she has breast cancer. Under McCain’s plan, says Edwards, insurance companies “wouldn’t have to cover preexisting conditions like melanoma and breast cancer.” Here’s what she doesn’t know:
1. Access to insurance is already guaranteed by current law for both McCain and Edwards. Any Senator or Senator’s spouse who has been participating in the federal employee’s health program cannot be denied coverage by any subsequent employer plan or in the individual market. This guarantee also applies to every other American who is currently in an employer plan under federal law.
2. What’s good about current law: you can’t game the system. At least not completely. Access to insurance is only guaranteed if you (or your employer) have been paying premiums into the system. Elizabeth Edwards apparently thinks insurance companies should have to insure cancer victims even if they were willfully uninsured and paid no premiums during all the years when they were healthy. Were that rule in place, we would all stay uninsured while healthy and rush to get covered only after we get sick. Only sick people would have insurance and the insurance would be very, very, very expensive!
3. What’s good about current law: it is enforced by the states. Federal law is enforced by the states and they do so in different ways. Also states are free to experiment with other reforms and there is no one-size-fits-all solution. Gov. Romney has implemented radical reform in Massachusetts. Gov. Schwarzenegger proposed a different reform plan in California. Other reform plans are being tried in Florida, South Carolina, Indiana, Oregon and elsewhere. Let a thousand flowers bloom.
4. What’s bad about current law: potentially smaller benefits and higher premiums. Depending on the state where you live, the new plan (to which you have guaranteed access) may not have the same benefits as the old plan and the premium may be much higher.
5. The solution: portable insurance. When a Dallas Cowboy becomes a New York Giant, he keeps the same health insurance plan, regardless of past injuries. When a United Mine worker moves from one employer to the next, he keeps the same insurance plan, regardless of preexisting conditions. The ideal solution is to let other people have what football players and mine workers already have: personal and portable health insurance.
6. The solution: creating a market for chronic care. Were John McCain to leave the Senate, he would be in Medicare. If he enrolled in a (private) Medicare Advantage plan, Medicare would pay a risk-adjusted premium – higher than average, because of his preexisting condition. In this way, Medicare encourages private plans to compete to enroll people with health care problems and search for ways to efficiently provide their care. In the Elizabeth Edwards’ world, by contrast, health plans would try to avoid the sick and if they failed at that, their incentives would be to underprovide care. For a demonstration of how truly bad an Elizabeth Edward’s world would be, see our analysis of managed competition.
Key questions for Elizabeth Edwards:
1. Do you really want a health care system in which insurers have incentives to attract the healthy and avoid the sick?
2. Do you really want a health insurance system in which every health plan has an incentive to overprovide to the healthy and underprovide to the sick?
3. Do you really want a health insurance system in which people who remain uninsured while healthy are allowed to get insurance (without penalty) after they get sick?
Would that I were a Senator!
Sounds good to me.
The facts do not support your arguments.
Point by point about “what Elizabeth Edwards doesn’t know”:
1) Her comment is not about Senators’ FEHBP insurance coverage. The problem is that a US citizen with cancer as a preexisting condition would find it difficult to obtain health insurance coverage on the individual market. An insurer may reject an insurance application because the applicant or his/her family has a minor or a serious disease – as minor as occasional migraines.
2) This is not about cancer patients being “willfully uninsured”. It is about cancer patients being unable to obtain health insurance coverage outside of employer (or group) sponsorship.
3) “Letting a thousand flowers bloom”, in state-by-state experiments in health policy, is not a solution for companies that are national, nor is it a viable alternative now, as many states are in deficit and unable to fund new health care coverages. In fact, some are reducing Medicaid coverages at this time.
4) This argument is specious, as the “new plan” may just as easily have better benefits and lower or the same premium as the “old plan”. The point is that the “old plan” is only perceived as good for those who are insured, and even for them, insurer cost shifting in the form of higher deductible and coinsurance is dramatically increasing out-of-pocket cost.
5) Personal and portable health insurance would be a wonderful solution. But the following must first be fixed: Individuals purchasing health insurance in the private market face medical underwriting (meaning that coverage can be denied, premiums increased or specific diseases excluded for defined periods of time) for reason of preexisting conditions), and insurers’ administrative costs for individual plans are much higher than group plans – which means that the medical cost ratio (amount of premium paid out in medical benefits) is lower.
6) Those over 65 years of age and eligible for Medicare do not face a medical underwriting problem. That is not what this problem is about. The problem is for those of us who are not Medicare-eligible, and particularly for US citizens who are employed by employers who do not offer health insurance or who are self-employed.
Point-by-point regarding “key questions for Elizabeth Edwards”:
1) “Do you really want a health care system in wich insurers have incentives to attract the healthy and avoid the sick” describes the current system perfectly, for the individual market. For the group (insured or self-insured) market, it ignores the trend to insurer cost shifting to beneficiaries through ever higher deductibles and cost sharing.
2) “…every health plan has an incentive to overprovide to the halthy and underprovide to the sick” is a nonsensical comment. Benefit schedules and provider compensation schedules emphasize coverage and care for the sick, such as treatment of broken bones and chemotherapy for cancer. Preventive care services (well baby, inoculations, mammography, etc) are typically supported by health insurance, to different degrees depending on the coverage.
3) “people who remain uninsured while healthy are allowed to get insurance (without penalty) after they get sick” ignores the outrageous cost of health insurance today, unaffordable for people with modest incomes, particularly if they are of middle age or older (because health insurance premiums become dramatically higher with increasing age, even if there is no preexisting condition that would yield rejection of an application for health insurance).
Elan Rubinstein, Pharm.D., MPH
EB Rubinstein Associates
ebra@pacbell.net
John, very good.
Not a bad response — except that if you happen to be one of the 47 million uninsured — who did not have easy access to employer-sponsored insurance or a public program, and get diagnosed with cancer, you are up the proverbial creek. With so many people not offered employer-sponsored insurance, or poor and low-income and not on Medicaid, you need to be careful not to be too glib.
Many of the uninsured are really not exactly uninsured by choice although some clearly are.
Thanks for including me on your mailing list!
Have been continuously subscribed to health insurance plans for all my life without a single break. A week ago I was denied medical insurance. We were trying to sign up for a plan with lower monthly fees and higher deductibles provided by by the same company that supplies my husband’s retirement Cobra coverage. They said their denial had to do with my physical condition. That’s nonsense. They are raking in $1,300/month on the Cobra plan, but would only rake in about $560/month on the other plan. The insurers put profits over people.
The key thing you stated is, “any Senator or former Senator can get health care coverage for cancer or preexisting conditions.” HOW about us middle class and poor people who don’t have the same medical care or retirement benefits that the elected officials (whose salaries we pay) do.
Give me a break!
John:
Reminds me of what an insurance agent told me years ago, “tell me when you are going to die and I will tell you when to buy your life insurance.” It doesn’t work that way.
If everyone in the country could have the health insurance that the federal hierarchy gets, no one would have to worry except the Secretary of the Treasury.
I really love the idea of creating a market for the chronic care. But I can’t imagine an insurer taking on that kind of risk without a subsidy. Or maybe a separate risk pool for people that don’t won’t to disclose their health and might pick-up some healthy folks to help defer costs. At one point I was wondering about weird payment options like 1 year in advance or mandatory renewal for a year or two. I’ve heard proposals for a rolling 5 year deductible.
What your scenario doesn’t count for is Americans who have been working for their American employers abroad. My employer had me working in Canada for five years, where I was covered under the public health care system there. My American employer did not have to pay any premiums to any US health insurer during that time.
Now that I’ve returned to the US and I’m trying to get health insurance, I’m being viewed by US insurers has as one of those people who chose to be uninsured “unininsured” for the past five years, when in fact, I was insured.
Due to the fact that I was successfully treated for cancer while I lived in Canada, the US insurers want nothing to do with me now. They can legally exclude me, despite the fact that I have never been without health insurance.
If I die or go backrupt because of this, let it rest on your conscience and on the rest of everyone else who thinks that the system is OK.