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05/11/2006 The Right Tries to Gut State Health Insurance Protections



Thursday, May 11, 2006

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US: Protecting State Health Care Standards

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 Hence, if we just eliminated those state laws and repealed the mandates, we'd have cheaper coverage.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.

More Resources

Valuing-Families

VT: Maybe Universal Health Care

Vermont cut a deal today for a plan promising universal health coverage, although the deal still leaves a few potential details up in the air for the future.

The basic deal is this: a new "Catamount Health" plan should be offered by private insurers within two years, with the state subsidizing coverage for lower-income families. If the private insurers fail to voluntarily offer the specified plan within two years, state regulators would have the authority to mandate that they offer it.

Originally, state legislators had wanted to have the state directly offer the insurance to state residents, much like Medicare and Medicaid, but the Vermont's Governor, Jim Douglas, insisted on protecting insurance company profits at the expense of the public. Giving in to the veto threat, the legislature agreed to have the system administered by private insurance companies as the only way to get a deal:

Senate President Pro Tempore Peter Welch, D-Windsor, noted the governor and Legislature conceded on important issues. "Many of us here believe that a self-insured system would provide more benefits for less cost," Welch said. "But we were satisfied that in the end, when we looked and listened to our own consultants, the proposal we have will provide a real benefit to Vermonters who need it. That is the bottom line for all of us."

The bill also includes a provision that requires employers to provide insurance to their employees or pay a $365 fee per full-time employee to the state.

The promise of the bill is more affordable health care for all families. We'll have to see if the final details as implemented hold up, but this was the promise of the bill as detailed last week:

It is supported by sliding fee scale subsidies for families of four making less than $60,000 a year or individuals making less than $30,000 a year. With Catamount Health, an uninsured individual making $25,000 can buy health insurance for $125 a month. When combined with Vermont's Dr. Dynasaur program for children, a family of four making $50,000 a year will be able to get coverage for $290 a month. Even the uninsured who don't qualify for the sliding fee subsidy will be eligible for Catamount insurance at a rate that is 34 percent less than what they might currently pay for similar coverage in the private market.

Stronger employer responsibility and cutting out the insurance company role would have made the bill better and the deal still hinges on whether the private insurance companies step up to the plate to provide the insurance promises; if not, we're likely to see a round of negotiating over what exactly state regulators will require the insurance industry to do. But it looks more promising than the Massachusetts deal from last month.

Research-Roundup

Affordable Housing, Corporate Subsidies, and America's Low Tax Burden

In a time of rising gas prices, a lot of commuters are asking if that "cheap" housing in a distant suburb is such a bargain, the Center for Transit-Oriented Development and the Center for Neighborhood Technology have created a new tool, "The Affordability Index" that measures the household budget tradeoffs made between housing and transportation costs and the advantages that families living in transit-rich environments gain.

Good Jobs First has inaugurated a new feature, Subsidies in the News, a review of state and local tax subsidies in the newsï┬┐┬Żand whether communities are actually getting the economic benefits from these corporate handouts.

Just in time for Congress giving the wealthy another $70 billion tax cut while cutting services for working families the Urban Institute has a new study showing that the U.S., including federal, state and local levels, has a lower tax burden than almost all other developed nations.

More Resources

US: Protecting State Health Care Standards

FamiliesUSA, S.1955 Resource Center and Action Center
Center on Budget and Policy Priorities, "Lessons From New Hampshire: Senate Health Bill Could Drive Up Health Insurance Premiums for Many Small Businesses"
National Alliance on Mental Illness, "State Insurance Parity Laws at Risk"
Connecticut Health Policy Project, "What is the Enzi Bill (S. 1955) and What Would It Mean for Connecticut?"

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Eye on the Right

While Senator Bill Frist demagogues on Senator Enzi's health care bill, his family's hospital company is abusing workers. The Los Angeles Times reports this morning that SEIU organizers were assaulted by security guards at a groundbreaking event for a new emergency room at an HCA hospital. HCA is a for-profit hospital chain owned by Senator Frist's family. They reported $1.4 billion in profits in 2005. Fortunately, state legislators are coming to the union's defense. Assemblyman Lloyd Levine, whose aide spoke at the event, has voiced his outrage over the way the union organizers were treated. A civil suit and NLRB actions are planned.

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Matt Singer
Editor, Stateside Dispatch