> 5 Freedoms You'd Lose in
> by Shawn Tully
> Monday, July 27, 2009 provided by <http://www.fortune.com/>
> If you read the fine print in the Congressional plans, you'll find that a
> lot of cherished aspects of the current system would disappear.
> In promoting his health-care agenda, President Obama has repeatedly
> reassured Americans that they can keep their existing health plans -- and
> that the benefits and access they prize will be enhanced through reform.
> A close reading of the two main bills, one backed by Democrats in the House
> and the other issued by Sen. Edward Kennedy's Health committee, contradict
> the President's assurances. To be sure, it isn't easy to comb through their
> 2,000 pages of tortured legal language. But page by page, the bills reveal a
> web of restrictions, fines, and mandates that would radically change your
> health-care coverage.
> If you prize choosing your own cardiologist or urologist under your
> company's Preferred Provider Organization plan (PPO), if your employer
> rewards your non-smoking, healthy lifestyle with reduced premiums, if you
> love the bargain Health Savings Account (HSA) that insures you just for the
> essentials, or if you simply take comfort in the freedom to spend your own
> money for a policy that covers the newest drugs and diagnostic tests -- you
> may be shocked to learn that you could lose all of those good things under
> the rules proposed in the two bills that herald a health-care revolution.
> In short, the Obama platform would mandate extremely full, expensive, and
> highly subsidized coverage -- including a lot of benefits people would never
> pay for with their own money -- but deliver it through a highly restrictive,
> HMO-style plan that will determine what care and tests you can and can't
> have. It's a revolution, all right, but in the wrong direction.
> Let's explore the five freedoms that Americans would lose under Obamacare:
> 1. Freedom to choose what's in your plan
> The bills in both houses require that Americans purchase insurance through
> "qualified" plans offered by health-care "exchanges" that would be set up in
> each state. The rub is that the plans can't really compete based on what
> they offer. The reason: The federal government will impose a minimum list of
> benefits that each plan is required to offer.
> Today, many states require these "standard benefits packages" -- and they're
> a major cause for the rise in health-care costs. Every group, from
> chiropractors to alcohol-abuse counselors, do lobbying to get included.
> Connecticut, for example, requires reimbursement for hair transplants,
> hearing aids, and in vitro fertilization.
> The Senate bill would require coverage for prescription drugs, mental-health
> benefits, and substance-abuse services. It also requires policies to insure
> "children" until the age of 26. That's just the starting list. The bills
> would allow the Department of Health and Human Services to add to the list
> of required benefits, based on recommendations from a committee of experts.
> Americans, therefore, wouldn't even know what's in their plans and what
> they're required to pay for, directly or indirectly, until after the bills
> become law.
> 2. Freedom to be rewarded for healthy living, or pay your real costs
> As with the previous example, the Obama plan enshrines into federal law one
> of the worst features of state legislation: community rating. Eleven states,
> ranging from New York to Oregon, have some form of community rating. In its
> purest form, community rating requires that all patients pay the same rates
> for their level of coverage regardless of their age or medical condition.
> Americans with pre-existing conditions need subsidies under any plan, but
> community rating is a dubious way to bring fairness to health care. The
> reason is twofold: First, it forces young people, who typically have lower
> incomes than older workers, to pay far more than their actual cost, and
> gives older workers, who can afford to pay more, a big discount. The state
> laws gouging the young are a major reason so many of them have joined the
> ranks of uninsured.
> Under the Senate plan, insurers would be barred from charging any more than
> twice as much for one patient vs. any other patient with the same coverage.
> So if a 20-year-old who costs just $800 a year to insure is forced to pay
> $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.
> Second, the bills would ban insurers from charging differing premiums based
> on the health of their customers. Again, that's understandable for folks
> with diabetes or cancer. But the bills would bar rewarding people who pursue
> a healthy lifestyle of exercise or a cholesterol-conscious diet. That's
> hardly a formula for lower costs. It's as if had to charge the
> same rates to safe drivers as to chronic speeders with a history of
> 3. Freedom to choose high-deductible coverage
> The bills threaten to eliminate the one part of the market truly driven by
> consumers spending their own money. That's what makes a market, and health
> care needs more of it, not less.
> Hundreds of companies now offer Health Savings Accounts to about 5 million
> employees. Those workers deposit tax-free money in the accounts and get a
> matching contribution from their employer. They can use the funds to buy a
> high-deductible plan -- say for major medical costs over $12,000. Preventive
> care is reimbursed, but patients pay all other routine doctor visits and
> tests with their own money from the HSA account. As a result, HSA users are
> far more cost-conscious than customers who are reimbursed for the majority
> of their care.
> The bills seriously endanger the trend toward consumer-driven care in
> general. By requiring minimum packages, they would prevent patients from
> choosing stripped-down plans that cover only major medical expenses. "The
> government could set extremely low deductibles that would eliminate HSAs,"
> says John Goodman of the National Center for Policy Analysis, a free-market
> research group. "And they could do it after the bills are passed."
> 4. Freedom to keep your existing plan
> This is the freedom that the President keeps emphasizing. Yet the bills
> appear to say otherwise. It's worth diving into the weeds -- the territory
> where most pundits and politicians don't seem to have ventured.
> The legislation divides the insured into two main groups, and those two
> groups are treated differently with respect to their current plans. The
> first are employees covered by the Employee Retirement Security Act of 1974.
> ERISA regulates companies that are self-insured, meaning they pay claims out
> of their cash flow, and don't have real insurance. Those are the GEs and
> Time Warners and most other big companies.
> The House bill states that employees covered by ERISA plans are
> "grandfathered." Under ERISA, the plans can do pretty much what they want --
> they're exempt from standard packages and community rating and can reward
> employees for healthy lifestyles even in restrictive states.
> But read on.
> The bill gives ERISA employers a five-year when they can keep
> offering plans free from the restrictions of the "qualified" policies
> offered on the exchanges. But after five years, they would have to offer
> only approved plans, with the myriad rules we've already discussed. So for
> Americans in large corporations, "keeping your own plan" has a strict
> deadline. In five years, like it or not, you'll get dumped into the
> exchange. As we'll see, it could happen a lot earlier.
> The outlook is worse for the second group. It encompasses employees who
> aren't under ERISA but get actual insurance either on their own or through
> small businesses. After the legislation passes, all insurers that offer a
> wide range of plans to these employees will be forced to offer only
> "qualified" plans to new customers, via the exchanges.
> The employees who got their coverage before the law goes into effect can
> keep their plans, but once again, there's a catch. If the plan changes in
> any way -- by altering co-pays, deductibles, or even switching coverage for
> this or that drug -- the employee must drop out and shop through the
> exchange. Since these plans generally change their policies every year, it's
> likely that millions of employees will lose their plans in 12 months.
> 5. Freedom to choose your doctors
> The Senate bill requires that Americans buying through the exchanges -- and
> as we've seen, that will soon be most Americans -- must get their care
> through something called "medical home." Medical home is similar to an HMO.
> You're assigned a primary care doctor, and the doctor controls your access
> to specialists. The primary care physicians will decide which services, like
> MRIs and other diagnostic scans, are best for you, and will decide when you
> really need to see a cardiologists or orthopedists.
> Under the proposals, the gatekeepers would theoretically guide patients to
> tests and treatments that have proved most cost-effective. The danger is
> that doctors will be financially rewarded for denying care, as were HMO
> physicians more than a decade ago. It was consumer outrage over despotic
> gatekeepers that made the HMOs so unpopular, and killed what was billed as
> the solution to America's health-care cost explosion.
> The bills do not specifically rule out fee-for-service plans as options to
> be offered through the exchanges. But remember, those plans -- if they exist
> -- would be barred from charging sick or elderly patients more than young
> and healthy ones. So patients would be inclined to game the system, staying
> in the HMO while they're healthy and switching to fee-for-service when they
> become seriously ill. "That would kill fee-for-service in a hurry," says
> In reality, the flexible, employer-based plans that now dominate the
> landscape, and that Americans so cherish, could disappear far faster than
> the 5 year "grace period" that's barely being discussed.
> Companies would have the option of paying an 8% payroll tax into a fund that
> pays for coverage for Americans who aren't covered by their employers. It
> won't happen right away -- large companies must wait a couple of years
> before they opt out. But it will happen, since it's likely that the tax will
> rise a lot more slowly than corporate health-care costs, especially since
> they'll be lobbying Washington to keep the tax under control in the
> righteous name of job creation.
> The best solution is to move to a let-freedom-ring regime of high
> deductibles, no community rating, no standard benefits, and cross-state
> shopping for bargains (another market-based reform that's strictly taboo in
> the bills). I'll propose my own solution in another piece soon on
> Fortune.com <http://finance.yahoo.com/magazines/fortune/index.html> . For
> now, we suffer with a flawed health-care system, but we still have our Five
> Freedoms. Call them the Five Endangered Freedoms.
> Copyrighted, Fortune. All rights reserved.