Lessons from the Health Care Meltdown

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    Here's an article I recently published in a special issue of The Regulator (the full issue focused on the health care debate is attached below):

    The current economic crisis teaches insurance regulators several key lessons to prevent a wholesale health care meltdown in America. Much like the financial sector, the health insurance sector has made short-term gains its priority rather than the health and well-being of its customers.

    As a result, private insurance fails to meet the needs of Americans and is increasingly unaffordable and unsustainable. Insurers have driven up premiums and out-of-pocket costs, putting consumers at financial risk if they need costly health care services or forcing them to go without needed care.

    For health care reform to work there must be the type of federal oversight and consumer protections required of the financial sector under the proposed Consumer Financial Protection Agency (CFPA). The creation of the Health Choices Administration (HCA), as outlined in proposed HR 3200 (a.k.a. America’s Affordable Health Choices Act of 2009), is critical.

    As a supplement to state oversight, federal oversight and enforcement should help ensure uniform enforcement of new federal consumer protection standards. Together they can best promote transparency, simplicity, fairness, accountability, and access to health care services. State regulators and attorneys general would be given authority to enforce federal standards alongside federal regulators. Federal law would only preempt weaker state laws.

    Several studies show that many states lack requisite resources and authority to oversee insurers. As a result, many states lack good consumer protection laws and even those with good laws often do not have the staff to focus on anything but the solvency of the insurers they regulate. Complementary federal oversight and enforcement protects Americans in states without the wherewithal to enforce the laws. It also provides the nation with a macro picture of our health care system that can uncover emerging trends among states.

    The federal agency must have full authority to require data reporting and greater transparency from the insurers. It will help standardize and rationalize data and improve our health care system. Currently, precious little data is available to compare insurance plans though they all are very different.

    A range of data from the insurers is essential if the government is to ensure plans are not discriminating against people with costly conditions and to educate Americans about differences among health plans. Data that should be available for government review include enrollment applications, retention rates, disenrollment rates, rating practices at issue and renewal, claims payment practices, and utilization review activities.

    In addition, the federal agency will need to establish measures of medical debt, uncompensated care, delayed or foregone care, balance billing, consumer cost-sharing, and to monitor plans to determine coverage adequacy. Finally, plans will need to report in detail on medical loss ratios and claims data so that the government can effectively operate risk adjustment systems and/or public reinsurance.

    Like the proposed Consumer Financial Protection Agency, the Health Choices Administration would operate an ombudsman program to provide consumer information and help resolve problems and complaints. The HCA would also have the power to set standards that lead companies to compete by offering products that consumers actually want — and understand.

    Health insurers will no longer be able to offer policies with pages of fine print that no one can figure out.

    The HCA mission should be analogous to that of the CFPA as described by Treasury Secretary Timothy Geithner: "This agency will have one mission — to protect consumers — and have the authority and accountability to make sure that consumer-protection regulations are written fairly and enforced vigorously."

    NOVRegulator FINAL 11-10-09.pdf3.54 MB


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    Strong regulation required

    I think you are right to say that the health insurance sector has made short-term gains its priority rather than the health and well-being of its customers. As noted this mirrors the actions of the finance industry where we have seen over enthusiasm for personal gain lead to the ruination of many lives across the nation.

    We need to be careful that a similar focus in the medical world does not lead to a similar adverse impact - the nations health.

    In this respect the HCA mission,to protect consumers — and have the authority and accountability to make sure that consumer-protection regulations are written fairly and enforced vigorous, is essential. I hope that someone is monitoring their performance. The words read great but need to be mirrored by action.

    reform now

    A very informative post and I agree with the writer and those who commented that there really is a need for a healthcare program reform. The time to change is now.

    Health Insurance Problems in America

    There is greater problems forthcoming to America.
    Big hospitals are shutting down and insurers are increasingly squeezing the fee schedules down by two ways: reject the claim right away first and allow payments for appeal process only which can delay some form of payments for as long as 90 days or push patients to pay higher co-pays making doctor visits prohibitive in nature.

    Also, Congress and Obama have not done their jobs respect to current health care problems. Public option is needed in the US. By making private insurers to cover all the uninsured basically Obama and congress have handed the medicare money to private insurers... This is not solving a problem...this is taking from a deep pocket to give it to someone else.

    Government has been complaining that Medicare cost is going up but is there any accountability of any funds from medicare funds being used for other purposes??? Also medicare is a fund paid almost 45 years ahead its start use date... But, Government claims there is enough funding to sustain medicare...

    This seems very strange in my view....Where is the money anyhow...stop blaming doctors and patients let's start looking what government has done with our funds!

    It might be too late

    This bill has been rumored to be created with effect of destroying health insurance companies with the final goal being a single payer plan. Not as a wild a rumor as the Obama not being a citized conspiracy theories, in actuality the health care reform rumor is founded in quite a bit of truth.
    In the long run I have no problem with single payer actually, but I am scared of this current bill becoming the vehicle that we use to get there because it is just so expensive. It is in fact much more expensive then a single payer plan. With the economy teetering globally, it won't take much more than a ridiculous bill like ours to push it over the edge.

    Health reform legislation

    Health reform legislation proposals in Congress may include an employer mandate , designed to increase participation by employers and by more of their employees. Health care is a human issue first; it is not and should not be a goldmine for the pharmaceutical companies and health care for maximum profit industry. The administrators assert that provision of insurance benefits motivates patients to seek healthcare services to remedy current ailments as well as to assess overall health status. In contrast, those without health insurance often seek only emergency healthcare.

    Health Reform Legislation

    I just met with the top executives of a certain large insurance company. I was amazed to find out that even they have no idea of what or how to prepare for this bill because no one seems to understand the complexities involved and the variables that will change.
    For instance I was surprised to learn that the 80/20 rule would not affect the insurance companies at all as they all are in compliance due to a little known portion of the bill that allows deductions for wellness programs. Yes the 80/20 rule will be offset (like tax write offs) by having wellness programs!
    Good luck HCA!

    Huffington Post Remarks

    This is in response to Mr. Potter's Huffington Post remarks of late December.

    I'm sorry Mr. Potter (how Christmassy is that statement?) but by your own admission this is a gift to the industry and you haven't made any convincing arguments that:

    1. The bill can or will be fixed any time in the next 5 years through more legislation
    2. That the Kennedy vision that you cite can be reconciled with this awful bill

    Unfortunately your post is mostly (unsubstantiated) hope that things will improve and understandable but misguided emotionalism from the stories you've heard and the people you've met. If you regularly read HuffPo you will notice numerous, lengthy, well-reasoned posts about the unlikeliness of the improvements here like those we saw to landmark civil rights bills.

    You of all people should know that the industry doesn't care, doesn't cave, and how it manipulates and the end-runs they'll do to avoid the weak enforcement mechanisms in this bill. Your post would have done a greater service if you exclusively talked about the ways they WILL do all those end-runs. At least that way we have a better chance at anticipating future battles and how this will play out.

    And you stayed COMPLETELY away form the failure of the president and key congressional leaders to push for anything remotely close to the Kennedy vision/a bill that will FORCE the industry to compete against a powerful govt run option. Maybe you care more about quicker results than entrenched corporatism but some of us do worry about an unholy alliance. This bill will increase and entrench that industry power which makes your reference to their deep pockets and resources all that much more troubling. You say the corporatized system is broken/corrupt yet you advocate strengthening it.

    >> progressives can't merely brush off their hands, move on to other issues and hope the stars will align again for "real" reform.

    This is a little insulting. This was THE key issue among progressive volunteers I worked with and explains their rage. Besides, the so-called "kill the bill" folks have done nothing of the sort. They're saying either insist that certain things be fixed or walk away and START OVER with a congressional RECONCILIATION bill and a better chance to get a much stronger bill. No one's brushing off anything. No one's consulting an astrologer. Also, since you glibly put "real" in quotes, yes, this is not "real" reform by the standards YOU YOURSELF previously stated.

    I understand your sense of urgency to save lives. Frankly, your post sounded a bit like you were burned out. Given that many aspects of this bill don't kick in until 2013 it's clear that this bill doesn't share that urgency. Perhaps a re-crafted bill could be more immediate. In fact, a serious expansion to Medicare or the VA system could be implemented FAR quicker than the current bill and save lives quicker and over timer in greater volume.

    I'm also saying to you that the President has sold us out. I worked hundreds of hours to elect him but I won't be fooled. I'm sure you know the level of donations he's gotten from your former industry. Don't enable this bad behavior. Don't copy it. If another legislative go-round is necessary and happens it's especially important that people like you publicly push back against him, Reid and anyone else. He's already lied that he never supported the Public Option. He must not only be pressured by people like you, he must be forced to pressure people like Lieberman which he apparently didn't bother to do.

    Please, your previous words were well-informed, insightful, strong and encouraging. Giving up now is not.

    We need serious emergency

    We need serious emergency health reform *now* -- no triggers. 19,000 more dead by Easter. 28,670 slain by the next 4th of July. What do you think?
    Harry from sajoo bonus

    Change...but not this change!

    Yes, we need health care reform. But the current Senate and House bills will not solve our problems.

    The answer? Try this simple idea? Increase utilization of HSAs, tax incentives for preventative measures and tax credits towards deductibles on health plans.

    Much cheaper and more effective than the ideas being discussed now. The uninsured? Provide basic coverage with mandatory preventative benefits.

    Health care reform: The public plan as a truth-in-care gauge

    Wendell, It occurs to me that a role a public option might play is one of providing transparency through the opaque curtain behind which health care pricing is decided. The agencies implementing the public option would have to provide services based upon pricing decisions that would be open to public scrutiny, so it would be a reference standard for judging artful skimming practices in private health insurance and any collusion among insurers and service providers. I have no way of knowing if the public option would serve this purpose: would you please comment? Perhaps its very small size will preclude it playing such a role. Do the private health care insurance providers oppose the public option for such a reason as 'dangerous transparency'?