California Health Care Deforminator Model ABX1 1: A Requiem
The Health Affairs blog has just wrapped up a series of posts from a number of folks who supported, to various degrees, the so-called “reform” that Governor Schwarzenegger and his allies recently tried to foist on California. I suppose that one could generally identify these ladies and gentlemen as “Clintonista” in their approach, although only one (Dr. Rick Kronick) is explicitly identified as a supporter of Hillary Clinton’s 1993 plan.
As I read the posts, I was amazed at how the words they use do not agree with my understanding of them. For example, they define “affordability” not as making health care more affordable, per se, but making someone else pay for my health care, thereby making it “affordable” for me! As for the taxpayer who makes it “affordable”, well, that’s his problem.
For example, Messrs. Curtis & Neuschler of the Institute for Health Policy Reform note that “Massachusetts substantially lowered premiums for people with individual coverage by merging its individual market with its much larger small-employer market and then bringing in lower risks with an individual mandate.” Good grief! Have these gentlemen not been following the fiscal crisis caused by the Massachusetts health reform, as discussed so freqently in this blog?
The scholars are also so captivated by the goal of “covering the uninsured” that they ignore the rock-solid evidence that the so-called “hidden tax” that the uninsured shift to the insured is a myth, and that insured citizens to not automatically and magically turn into responsible patients who seek timely, preventive, care from their physicians instead of crowding into ERs after their illnesses have advanced (as I have discussed).
Nor do the scholars really seem to understand the consequences of the reform: Lucien Wulsin (who alone points out that ABX1 1 actually had no mechanism to control costs), suspects thncat the reform would have shifted Californians from employer-based to individually purchased coverage, but ABX1 1 did not anticipate this at all. In fact, it mandated employer-based coverage more explicitly than individual-purchase, because it defined the tax levied on non-compliant employers, but not in individuals (as Massachusetts did).
Nevertheless, the blog discussion is quite thoughtful. Overall, the least convincing entry is from Patricia Lynch who speaks for Kaiser Permanente. Although she recognizes that requiring guaranteed issue and community rating in the individual market without a mandate to buy health insurance leads to a death spiral of adverse selection, she is unwilling to face a coverage-mandate’s cost increases. But why should she? An integrated HMO like Kaiser Permanente benefits from such cost hikes. Nor does she point out that ABX1 1’s minimum medical loss ratio (MLR), of 85%, would have given Kaise Permanente an overwhelming competitive advantage because it shifts medical costs to its facilities, which its competitors (who do not own hospitals) cannot. This MLR regulation threatened to cut the number of carriers competing in California in half, leaving Kaiser Permanente sitting pretty.
Fortunately, we do not have to rely on interest groups to bring these consequences to light, as a friendly neighborhood health policy analyst, yours truly, has explained them thoroughly (and humbly).