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PSN on May 11, 2006 - 2:15pm
Senator Mike Enzi (R-WY) has a truly bad idea. He wants the U.S. Senate to adopt a bill (S. 1955) that would gut state insurance mandates and allow for price discrimination by insurance companies -- all under the guise of lowering the cost of health care (note -- it will not actually lower the cost over the long-term). More importantly, the bill punts on the fundamental question: how do we achieve health care for all Americans?
Gutting Consumer Protections: Conservatives argue that the network of state laws regulating insurance and mandated coverage drive up insurance costs, which get passed on to employers. Employers faced with rising costs drop coverage. Hence, if we just eliminated those state laws and repealed the mandates, we'd have cheaper coverage. This is all true but only in the short term. The bill is a penny wise and a pound foolish. Senator Enzi's bill would see a moderate decrease in health insurance costs in the short term, but the tradeoff would be a marked increase in individuals holding the bag completely for health care costs -- at sometimes catastrophically high cost to individuals and, eventually, to insurance companies and employers.
FamiliesUSA, which has been doing excellent work corraling opposition to Senator Enzi's bill, has compiled a table of mandates that are supposedly hurting people. Among the coverage that could be dropped is: alcohol and drug abuse treatment, ambulance service, mental health, contraceptives, and cancer screening.
These mandates have not been adopted without reason by the states. Health insurance that does not cover mental health or addiction treatment ignores some of the largest medical issues in America. Declining to cover contraception and cancer screening saves money in the short-run, but diminishes preventive care and increases costs over the long term. Refusal to cover certain emergency services can result in catastrophic costs to individuals resulting in bankruptcy and cost-shifting to the rest of us.
Repealing these mandates by federal fiat will lower costs in the short-term and may even allow more employers to purchase insurance coverage for their workers. But when those workers seek medical care, they will often find that their policies do not cover the costs they have incurred. Loophole-ridden coverage is no substitute for comprehensive insurance.
Price Discrimination: But this is not the only problem with the bill. States require that insurance companies offer "community rating" prices -- to insure that businesses with older or less healthy workforces are charged similar rates as businesses with younger or healthier workforces. Without community rating, businesses have strong incentives to discriminate against elderly employees or workers prone to illness. Senator Enzi's bill eliminates community rating, allowing insurance companies to engage in price discrimination. These provisions have caused AARP to denounce the bill arguing that it creates incentives to discriminate against elderly workers. AARP's concerns are not purely theoretical.
Several years ago, New Hampshire experimented with such a system. As they found, it was unworkable. While some businesses did see their insurance rates drop, others saw theirs skyrocket, according to a report from the Center on Budget and Policy Priorities. In fact, the CBO estimates that one in four small businesses would experience higher premiums under Enzi's bill.
A Coalition Opposed: All of this explains why such a large coalition has come together to oppose Senator Enzi's bill. The coalition includes national organizations like the AFL-CIO, AARP, American Cancer Society, and the National Alliance on Mental Illness to local organizations like Progressive Maryland, Maine Dirigo Alliance, Georgia Rural Urban Summit, Colorado Progressive Action, and New Hampshire Citizens Alliance. The coalition includes a bipartisan mix of governors, insurance commissioners, attorneys general, and legislators.
The coalition welcomes your support. FamiliesUSA has a page set up to email your Senators. Reuters is reporting that the bill is on its last legs. Help us throw it an anvil. Stand up for state consumer protections. Contanct your Senator today.
Beltway v. Reality
To understand how out of touch, Washington, D.C., is, you need to look at coverage of Enzi's health insurance deform bill. The Washington Post leads with, "Prospects appear bleak for legislation that would let small businesses band together across state lines to buy health insurance for their workers." Reuters first paragraph reads, "A Republican bill aimed at helping small businesses get affordable health care in part by freeing them from many state regulations appeared stalled in the Senate on Wednesday, and could be killed in a day or two."
This bill, apparently "frees" business from regulations to let them "band together" to buy insurance. That sounds lovely. But the bill in question is actually legislation to allow insurance companies to engage in price discrimination and allow for gutted coverage with no consumer protections. Only in Washington could it be bleak for such a bill to be on its way to a quiet death. Meanwhile, in the states, real health reform is under way -- reform that gets to the heart of extending coverage to more citizens. While Washington punts on the big question -- and tries to do big favors for the big insurance companies -- states continue to lead the way on health insurance. See Vermont's story below for another great example of state work on this subject.