Group Health Insurance!

Back in August, when I first read Whole Foods CEO John Mackey’s WSJ article about health care reform, I did think that it was a little odd for him to be voicing so publicly an opinion that was certain to run counter to the opinions of a large percentage of his store’s clientele.  His opinions aren’t radical or unusual – indeed they are shared by a good chunk of the American public.  But not necessarily the chunk that shops in his stores.  People who shop at Whole Foods don’t have to shop there.  They aren’t shopping there because there are no other grocery stores in the area.  Or because they have no car and Whole Foods is the closest store within walking distance.  And given the left-of-center average demographic of Whole Foods shoppers, I found his public opposition to health care reform to be a bit strange.

I agree with several of the points Mackey made.  I agree that HSAs should be available to anyone who wants one.  But just having an HSA in place doesn’t mean that a person will have money to fund it; for a lot of people, HSAs won’t make health care any more accessible than it is(n’t) now.

I strongly agree that employer-provided health insurance and individual health insurance should be treated equally as far as taxes are concerned.

I agree that we need tort reform.

I agree that health care costs need to be much more transparent.

Mackey writes that we should modify the tax code so that people can make voluntary, tax-deductible contributions to help provide care for people who are uninsured.  The rainbows and puppies nature of this idea is nice in theory, but I don’t think we want to rely on voluntary donations to pay for the care of 47 million currently uninsured Americans.

His other suggestions – to allow the purchase of health insurance across state lines and to eliminate government mandates from health insurance coverage – are fraught with complications and not nearly as simple as he makes them sound.  The number one priority in health care reform needs to be the American people.  Yes, there is a lot of special interest involvement in health care, but removing consumer protections that have been won by state insurance commissioners isn’t going to ensure that people have access to quality care.  And removing mandates from coverage would result in lower premiums, but it would also mean less coverage, which isn’t necessarily a good trade-off.

As expected, Mackey’s article triggered a firestorm of anger from his base of liberal customers.  Jaan Sidorov of Disease Management Care Blog wrote an article about a group that staged a pretty creative demonstration in a Whole Foods store in Oakland.  Mackey believes that health care (along with food and shelter) is not a basic right.  The protesters – and I think quite a few of Mackey’s customers – feel differently.  Mackey is obviously doing well financially, and probably doesn’t have to worry about how he’s going to pay for his own health care.  I think it’s a lot easier to say that health care isn’t a right when your own health care is well-secured.  Mackey’s belief that health care is best left to the free market makes sense, given his participation – and success – in market economics over the years.  But with any commodity in the marketplace, there will always be people who can’t afford it.  Especially when the commodity is as expensive as health care has become.  The life or death nature of access to health care makes it too important to place it on the same shelf as cars and jeans and high-end organic potato chips.  It people can’t afford (and thus don’t purchase) those things, they will still be ok.  The same can’t really be said for health care.

I found Jaan’s article in the Cavalcade of Risk, hosted this week by David Williams at Health Business Blog.

If you are one of the many who have been denied health insurance and cannot find any type of coverage, there may be public options in place to assist you. Although the law does not require it, many states have high-risk pools who will allow those deemed uninsurable some opportunities to purchase coverage for themselves. High-risk pools are are private, self-funded health insurance plans and right now, they are the only readily available public option for those previously denied health insurance coverage.

Public Options More Expensive

It is important to know that the cost of high-risk pool insurance is more expensive than traditional insurance provided by a private insurer.

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Pamela Longbottom tried to sneak a jawbreaker from her eight-year-old’s bag after returning home from trick-or-treating. Biting into the hard candy provoked a scream of pain, however, and an unexpected trip to their dentist. Having purchased dental coverage from a California Health Insurance agent eventually allowed her to smile again.

Pamela Longbottom, a single mom, decided to go out trick-or treating with Morticia, her pale-looking eight-year-old. She was pleasantly surprised when the choice of her daughter’s name was greeted positively for once by one of the family’s more astute neighbors. “Oh, I see you’re out with little Morticia,” Mrs. Joan Doe ob

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You may not realize it, but until the age of 18 you really do have it made. Sure you may be clamoring for more independence and space to yourself, but with that age comes great responsibility. Part of that responsibility is the fact is that health insurance providers will no longer automatically cover you under your parents’ health insurance plan as on their books, you are considered an adult. Your parents may no longer think it is cost-effective to cover you under their policy and if you are going to college, opting to use the school’s insurance policy can be one of the best ways to save on health insurance.

Group Rates

When you join a health insurance plan through a school, you will be able to take advantage of a discounted group rate.

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The discussion about setting minimum limits for health insurance coverage is not a new one, but it has become more important with the increasing possibility of mandatory health insurance.  Anthony Wright, at Health Access Weblog does a nice job of discussing the issue.  There’s another aspect to this that I think deserves some attention: marketing and consumer perception of health insurance policies.  It’s one thing if a client knowingly purchases a policy with high out of pocket limits.  Some people might look at my family’s $5000 deductible HSA qualified plan and say that it’s no good because it doesn’t cover anything until we pay the first $5000.  But to us, it’s perfect.  It keeps our premiums down, and we’ve made funding our HSA a priority over the years, so that we could afford to meet the deductible if necessary.  The main point is that we were aware of the out of pocket exposure when we got the policy.

In Colorado, discount-style plans are required to state clearly on their marketing materials that “this is not insurance”.  This is common on dental and vision discount plans, and on some of those too-good-to-be-true policies that promise to cover a family of six for $100/month.  But there are other plans that technically qualify as insurance, but still leave members with precarious gaps in coverage.

Policies with low per-incident or annual limits are one example, as are plans that break down claims into specific sections (things like per day hospital expenses, for example) and cap each section with a set dollar amount.  Some policies have extremely high coinsurance stop-loss limits, but are sometimes sold by agents who focus on the 80/20 aspect of the policy, rather than the actual out-of-pocket limit of the coinsurance.  In all of these cases, if the consumer is completely aware of what is being purchased, what the coverage limitations are, and how much exposure they would have in a worst case scenario, I have no problem with the policies being sold as insurance.  If the premiums are low enough and the consumer is educated about the coverage, even a catastrophic-only policy might have some takers (although I find it hard to believe that many people would knowingly purchase a policy that could leave them with hundreds of thousands of dollars in bills – one would assume that if plans like that were clearly marketed, they wouldn’t sell very well).

But the problem is that the consumers are often not well informed about their coverage limits.  This might be because the agent is new to the business or just desperate to make a sale.  Or it might be because the consumer is so anxious to get a low premium that the nitty gritty details of the coverage get ignored.  Whatever the reasons, it’s all too often that people find themselves in a financial mess because the holes in their health insurance policies don’t become evident until they are in the midst of a large claim.

My own opinion on this is that we need to maintain a wide range of options for consumers, but enact more consistent marketing guidelines.  If a consumer has a large bank account for emergencies and is happy with $25,000/year in out of pocket exposure, it’s not my place to tell that person that the policy is unacceptable.  But if a consumer is unaware of the $25,000 out of pocket exposure and purchases the policy because of a slick sales presentation, that is most definitely a problem.

Currently, health insurance marketing is regulated on a state-by-state basis by insurance commissioners.  In Colorado, we have the health plan description form that is standardized and makes comparing plans somewhat simple.  But it tends to get buried in marketing materials, and is often overlooked by consumers.  I would take this a step further and make sure that all plans – regardless of where they are sold – clearly state the important details up front.  Things like deductible, coinsurance limits, annual or per-incident limits (if any), major exclusions (expenses like prescription drugs or physical therapy, for example) etc. should be stated clearly and concisely on all market

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