After folding on ABX 1 1, the governor now tries his hand at the state’s dwindling budget with desperate ideas to rescind tax credits and request more federal funds. As for health care, the legislature’s “new” approach is incremental change. There are few winning hands thus far.
The publicity and the defeat of the governor’s great health “package,” ABX 1 1, shows us that, as with many policy issues, lasting reform will come with piecemeal, practical change. Alternatively, sweeping reform could have costly ramifications, and the Massachusetts health plan serves as an enduring example. Although innovative for its time, officials now estimate that spending may exceed its budget by $150 million, and its individual health insurance mandate is still not fully enforceable.
The fear of serious health problems has a way of enticing just about anyone to advocate big legislative changes, without delay. Insurance companies haven’t helped matters lately by rescinding individual policies. Blue Cross, in particular, made headlines for asking doctors to report the pre-existing conditions of their patients covered by individual policies. Insurers are already an easy target for advocates of more government regulation, especially when they dishonor doctor-patient confidentiality.
Regulators have stopped health plans from “post-claims underwriting,” or rescinding policies from applicants who misrepresented their health status, unless they could prove that an applicant did so intentionally.
We need to re-examine insurance, but also the effects of government-imposed regulations on the system. Although unpleasant, it is the business of insurance to price health risk, and additional regulation makes medical underwriting that much more difficult to accomplish. Meanwhile, it would be virtually impossible for insurers to underwrite any other way, as with authorization to obtain health records, which are hard to acquire from doctors’ convoluted paper trails.
One would think that legislators under the gun would play it safe during this time of impasse. Bringing costs down is the real solution, after all, for lasting affordable health care and increased access. But current legislative proposals simply mean a bad deal. Senator Sheila Kuehl’s SB 840 would implement a single-payer monopoly health plan for the state, eliminating private options in health care, reducing the number of California physicians, and creating waiting lists for services at an estimated $1 billion each year.
Sen. Kuehl would also require health plans to spend at least 85 percent of premiums on medical costs – an arbitrary accounting scheme with no real implications for increased quality. Such a proposal actually threatens to slash the number of California health insurers by half, reducing the chance of increased competition and lower costs. Assemblyman Martin Garrick, however, holds a strong hand for reform.
His AB 2292 would exempt contributions to health savings accounts (HSAs) from the California state income tax. HSAs are part of the consumer-directed plan for incremental change and long-term health care reform. With more deregulation of the individual insurance market, however, HSAs could also help those with health problems right now.
If the individual market in California weren’t overregulated with 50 different mandated benefits, insurers could compete for a broader spectrum of patients, including those with pre-existing conditions.
State subsidies that currently fund California’s Major Risk Medical Insurance Program (MRMIP) for a growing population of “uninsurable” people, could subsidize many of these patients to buy individual insurance, in some cases in conjunction with a tax-deductible HSA and a high-deductible health plan (HDHP). Reports indicate that 84 percent of HSA/HDHP policies offer coverage for preventive care, without requiring individuals first to meet their deductible.
More government regulation of health care may be appealing in the short term, but the time has passed for long odds. History has taught us that a healthier future will begin with more lasting, affordable options for more Californians. Consumer directed ideas are a winning bet.