I keep waiting for the doughty advocates of “increasing health insurance competition by more government regulation” (that may or may not include a public option) to explain why insurance should not be available across state lines. Not only is this reform missing from Democrat proposals, the reason why it is missing remains completely off-stage. I’d like to hear some rationale for so limiting the insurance market, even if it’s a specious one.
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Meta
That’s an easy one. State governments have no power to regulate commerce in other states. Business decisions about any cross-state-line policy would be the purview of the Federal government.
That’s not a reason, Joseph. It’s a punt. Yes, it would allow for federal regulation, but there’s no constitutional reason to object from a conservative POV.
The reason the Democrats oppose allowing interstate purchases is because it would allow residents in loopier locales to buy the insurance they need from saner jurisdictions instead of having to subsidize things like fertility treatments, sex change operations, and marriage counseling. So no insurance company with a lick of sanity would stay in states that overburden companies with peculiar mandates.
Thank you, Heather McDonald! This is one of my screaming-at-the-TV-triggers. Polichinello outlined one of the main reasons why Dem’s oppose it, but I don’t recall any GOP politico calling for a lifting of this restriction.
Of course, this is just one way in which Dems, insurance companies, and many Republicans put the kabash on any real free enterprise medicine. These marketplace restrictions (such as ridiculously useless licensing) restrict trade, push up the regulatory costs, and make health-care more expensive. THIS leads to many Americans saying “to hell with it; let’s try national health care.”
If conservatives truly want to save us all from Obamacare, more attention needs to be focused on these problems.
But Heather….the whyden amendment allows for states to do exactly that 😉
I could have sworn either Arnold Kling or David Henderson stated that the Baucus Bill does allow buying insurance across state lines. Can’t find the link…
Because one or two states will allow insurance companies to get away with all kinds of things in their fine print, and all the insurance companies will flock to those states? Kind of like what happened with credit card companies flocking to Delaware and North Dakota to avoid other states’ usury laws.
Because one or two states will allow insurance companies to get away with all kinds of things in their fine print, and all the insurance companies will flock to those states?
Another punt. Sure, this could happen, if the feds don’t regulate the interstate commerce, but they can do that. Even with the most originalist interpretation, the federal government can lay down rules for selling insurance across state lines.
but there’s no constitutional reason to object from a conservative POV.
I didn’t say there was. But the states themselves have interests in how insurance companies write policies–and our Congress is made up of representatives and senators who have state interests as well as national interests. My state, Ohio, passed a “mental health parity” law stating that insurers must treat mental illness in the same fashion as they treat physical illness in their coverage. By a fluke, the US Congress followed suit with a rider to a completely different bill a few month later, but there is no reason why this had to happen.
Before the discussion goes off on a tangent, I am both a mental health consumer and a former mental health professional [nothing lofty, just a part-time CSR for a State of Ohio information line,and a contract researcher and writer of mental health reports for that same state.] The steadily accumulating clinical evidence indicates that even milder forms of mental illness are, strictly speaking, biochemical and there is no reason for insurers to treat them differently other than the economic one that it costs them less to do so.
But the whole issue misses the real problem. The growing number of uninsured and underinsured is acting as an economic deadweight on the entire medical sector. This benefits no one except the people writing the coverage, who get a permanent seller’s market.
The providers cannot fully pass costs along to insurers but still must charge more and care less [particularly the larger ones like hospital consortiums] to remain profitable.
The companies who contribute to their worker’s coverage have to buy policies that cover less, or shift more premium burden to their employees, to keep the costs down. This results in bait-and-switch bargain coverage tactics by insurance companies trying to expand or keep business. I strongly suspect, by the way, that this would greatly increase with cross-state-line coverages.
And the taxpayer ends up supporting stretched emergency care services on the local level and a growing Medicaid burden of working poor on a national level.
For all the “anti-socialism” “anti-nanny government” fanatics, the United States already has a considerable number of people with medical coverage funded by the US government: Medicare and Medicaid. As someone with a disability, I am on both and I can state unequivocally that the government is less intrusive into my life and privacy than private carriers because they are not trying to enforce a pre-existing condition clause. They do not ask for medical history when you start coverage or while you are covered.
The government also contracts out all of the “insurance business” record keeping, issuing EOB’s [they call them something different now], and evaluating “medical necessity” back to private carriers. I suspect that the “public option” would actually benefit smaller carrier operations who bid to do this by reducing their risk exposure.
The State of Ohio asks me to prove I’m still poor enough for Medicaid every six months, and the Feds mandate that I report extra work and income as well as have my condition re-evaluated every so many years. These don’t seem unreasonable to me given that the taxpayers are funding my coverage.
What the dreaded “public option” means is little more than this. The underinsured and the uninsured would have the choice of buying into similar 80/20 coverage as I have with Medicare. In my state, if they are employed, they already have the option of doing this with Medicaid, and the foundations of society in Ohio have not been shaken. Unless you do a high-volume business, Medicare and Medicaid are break even propositions for providers, but that is considerably better than having to chase after people who can’t pay their medical bills, or turn people away who can’t pay cash and carry for care.
There is another issue which is the quality of our lives. When I was growing up it was rare and shocking to see people in public with missing teeth. Now it is commonplace. I really don’t believe that this is a Goth fashion statement.
By a fluke, the US Congress followed suit with a rider to a completely different bill a few month later, but there is no reason why this had to happen.
Yeah, there is. They have to face voters, too. That’s how it would work all sorts of procedures. In a state like Mass. the loonies can capture a legislature and force all sorts of procedures, funded by everyone else in the state. Now you kick it up to the interstate level and that sort of thing wouldn’t happen. That’s why the mental coverage you’re talking about is becoming more and more viable.
The growing number of uninsured and underinsured is acting as an economic deadweight on the entire medical sector. This benefits no one except the people writing the coverage, who get a permanent seller’s market.
The GOP has come around to prohibiting bars on pre-existing conditions, and we could come up with a subsidy for those who need the help. So, really, this isn’t an issue if you move insurance to the interstate level.
At any rate, a lot of the growth of the uninsured is due to illegal immigration.
What the dreaded “public option” means is little more than this. The underinsured and the uninsured would have the choice of buying into similar 80/20 coverage as I have with Medicare.
Great, but doctors loathe Medicare and its fees. A lot refuse to do business with it, so if you want a real deadweight on the medical sector, expand Medicare and fee controls and watch the field shrink as older doctors retire earlier and students avoid the field altogether.
When I was growing up it was rare and shocking to see people in public with missing teeth. Now it is commonplace.
I’ve failed to observe this. Maybe Houston just doesn’t have teeth issues.
Polichinello, with respect, you have no idea what you’re talking about when you say that “doctors loathe Medicare and its fees.” I suggest everyone reading this blog and comments check with their own physicians on this very point. Here’s what you will get, almost verbatim: “They don’t pay as much as I would like, but thank God they do pay without giving me and my office hassles the way private insurance companies do.”
Anecdote isn’t data, but I haven’t met a single physician who didn’t become a doctor just for the money (and most aren’t that kind of doctor) who wouldn’t gladly replace the current hodgepodge of private insurance with Medicare. Ask – you’ll find out. Private insurers are the biggest headache doctors have, not least because of the significant overhead in staff and time they demand, because they are so difficult to deal with.
Speaking personally, I have no problem with any changes that get more people covered than we have now. As I said before, that is the essential problem. We’ve already gone round on immigrants and public health on another thread, but consider this. If you lose a job, you lose your employer’s contribution to your medical coverage. You can still keep the coverage because of HIPAA but you have to pay the entire premium, and, at least in my state, your unemployment compensation amounts to half of your take home pay. I can tell you from experience that this is virtually impossible to sustain if your former income was moderate. So you lose coverage. By the time you get back in the workforce you are likely to get back onto a plan that covers less for more money than you had previously. So you become underinsured.
Go through this enough times with a moderate income down at the bottom of the economic cycle and you become seriously underinsured. Every little bit of this puts more strain on the provider system as a whole.
The insurance business is not magic. You write coverage that allows the healthy to carry some of the burden of the cost of caring for the sick. The larger the coverage pool, the easier it is to spread that cost over more of the healthy so each individual is burdened less. There is no serious reason why the pool couldn’t be 300 million people to the benefit of everybody, The government would probably not do this perfectly, but it never does anything perfectly, and better is better whether it is perfect or not.
Sheldon,
Are you telling me significant numbers of doctors aren’t refusing Medicare patients? Because if you are, you are–with respect, of course–full of shit. You can simply type in “doctors refuse Medicare” in Google and get pages of results:
http://www.google.com/search?hl=en&safe=off&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&q=doctors+refuse+Medicare&aq=f&oq=&aqi=g1g-m1
It’s true that there are doctors now who only take cash, but the number of doctors refusing only insurance while taking Medicare…well, it probably doesn’t exist, while it does exist the other way around.
There is no serious reason why the pool couldn’t be 300 million people to the benefit of everybody, The government would probably not do this perfectly, but it never does anything perfectly, and better is better whether it is perfect or not.
Joseph, that’s the point behind allowing interstate trade. Now you can create larger pools for companies to work with. You can lay down regulations addressing the problems you detailed with a minimal safety net.
The problem with having the government do something is that it now has the a similar incentive structure to a monopoly. The people providing service aren’t really too concerned about making their customers happy as they are their political overseers, who don’t answer to the voter as much as they do special interests. This will become a real problem as the government tries to do more with a smaller tax-base as our population ages. It’s going to have to lay down it’s own rationing scheme, and that scheme will be determined by who has the most pull. Got heart disease? Too bad, it’s not chic, you ate too many hamburgers, and you’re 55 anyhow. We’ll spend the money on AID’s for young performance artists instead, because they have a good lobby.
Now, employer-provided insurance is not ideal, and I would favor pushing it back to the individual by a means suggested by David Goldhill in the Atlantic, but it’s still more flexible than having the government do it in a single-payer fashion, because you can move to another provider or even buy supplemental insurance.
Here’s a link for the Goldhill piece:
http://www.theatlantic.com/doc/200909/health-care
It’s quite an excellent article. But I do think the package of reforms proposed would create a chaotic decade of restructuring that would have negative impact on the care of most of us during that time.
I think that a much simpler way to alter the % of care that the consumer both pays for, and can access information about, would be a total government coverage “floor” of 60-40 with no deductable and no out of pocket limits, funded directly out of general tax revenue. If the government is paying at a low rate for all procedures it can publish the information about it’s “allowable” expenditures standards, and the way they are calculated, and make it available to everyone. And it could, if necessary, mandate the same standards for the secondary coverage written by private insurers. This would put one of the major problems of carrier/physician relations into a goldfish bowl where the electorate could have some input into it.
This would allow private carriers to write secondary coverage to cover the remaining 40% at what I think would be both lower prices to the consumers [whether individuals or businesses] and, actually, greater profits for itself because of the reduction of carrier risk exposure. All of the current varieties of plans could remain in place but apply to the 40% uncovered by the government.
Though this is so, I think that “deductables” and “out of pocket” limits as a whole should be eliminated. One of the reasons patients cannot make informed decisions about costs is that the % they absorb varies widely throughout the year. In January they may be paying all of it, and by December none of it.
What you would have in a case like this is a flat % covered by the patient in all cases: 40%, 30%, 20%, or 10% depending on the presence and the type of secondary coverage that an individual or an employer buys.
With this sort of simplified way of measuring everybody’s actual health care cost, a simple ratio of cost to yearly income could be established for supplemental funding for the poor. And, in addition, it would eliminate the sheer bewilderment of everybody about prices that makes competition difficult if not impossible.
Finally, actually running this system would be far simpler and could be contracted to the secondary carriers, when secondary coverage exists, and put out for bid where secondary coverage doesn’t exist.
Ummm….you can’t have bars against pre-existing conditions unless you have some version of universal coverage.
Even conservatives should be able to understand that.
Polichinello, citing WSJ articles (including one written in 1992) written by conservatives isn’t evidence. And I agree, and stated in my first post, that doctors don’t like Medicare’s fee schedule. That said, things seem to have changed. From a recent Newsweek piece:
Newsweek
By Jeremy Herb
Ever wondered what your doctor thinks about the public option? A survey published today found most doctors are in favor of it. The study, funded by a grant from the Robert Wood Johnson Foundation, found nearly three quarters of physicians surveyed supported a public option in the U.S. health-care system. The majority, 63 percent, favored a health-care system with both private and government-run insurance options, and 10 percent preferred a public-only system. Twenty-seven percent favored a private insurance system without creating a public option.
The report, published in The New England Journal of Medicine and written by Salmoeh Keyhani and Alex Federman of the Mount Sinai School of Medicine, surveyed 2,130 physicians between June 25 and Sept. 3. The poll examined support for the public option geographically, too, finding that a majority of physicians in all regions supported it. “The clear message here is that physicians who are on the front line of the health-care system know the system is broken and that it’s time for us to do something about it,” says John Lumpkins, a senior vice president at the Robert Wood Johnson Foundation.
The survey also asked doctors if they supported expanding Medicare to allow 55- to 64-year-olds the option to “buy in.” Fifty-eight percent were in favor. . . . .
Sheldon,
First, the 1992 article you’re citing was the New York Times, not the Wall Street Journal. Second, though the editorial page of the WSJ is conservative, it’s reporters are often not. Third, there are plenty of other sources in those Google links.
Now to your poll. That 59% support expanding Medicare in general does not do away with the fact that many doctors avoid it. If you expand the Medicare process, you will be faced with the same problem on a larger scale. In fact, look at the big number touted from the study about supporting a mix of government and private options. Well, THAT is what we have now, and doctors still avoid the government options. Maybe not the ones YOU talk to, but enough do to be noticed, and nothing in Obama’s bill(s) would fix that.
If the government is paying at a low rate for all procedures it can publish the information about it’s “allowable” expenditures standards, and the way they are calculated, and make it available to everyone.
The only way the government can do that is through price controls, and that will lead to a spriral of rationing, which will get worse as the population ages and medical professionals leave the field.
Polichinello, we’re starting to generate more heat than light, but the recent WSJ piece on the subject on the screen you linked to was written by Turner and Antos, described thusly by the WSJ: “Ms. Turner is president of the Galen Institute. Mr. Antos is a scholar at the American Enterprise Institute” Not exactly impartial sources. The bottom line is that some doctors indeed don’t like Medicare. But most are increasingly frustrated by private insurers, and have to have additional staff just to deal with the various insurers, the additional paperwork, and advocacy on behalf of their patients who increasingly and routinely are shortchanged by insurance companies. As I said, ask your doctors.
The only way the government can do that is through price controls, and that will lead to a spriral of rationing, which will get worse as the population ages and medical professionals leave the field.
Now, come on! Don’t you know that every carrier has a standard of “allowable” expenses which they will pay at the given policy rate? Sometimes these are called the UCR or usual and customary rate. In the private sector, they usually use some standard of averaging the fees for a given procedure in a given market. The median or mean, say, of an ordinary GP office visit and examination [Which has a specific numbered code, known as a CPT code, different from an “extended office visit”.] is $25.00 in Columbus, OH. The carrier will then pay all charges of $25.00 or below at, say, 80% of charge. They will pay nothing of any remaining balance above $25.00. If they didn’t have something like this, unscrupulous providers would inflate their fees through the roof.
With Medicare, which has 80/20 coverage, providers are forbidden by law from billing the patient for more than 20% of total allowable over the 80% of total allowable Medicare pays. When you hear about providers complaining about Medicare reimbursement, that’s what they’re complaining about; they cannot charge the patient or the secondary carrier more than the fixed 20% allowed by Medicare. The EOB’s you get from Medicare will always have an explicit “you may be billed” column for each line item to let the patient know that he cannot legally be gouged for everything the provider would like to have paid.
One of the problems with Medicare is that these charge limits are usually far below what the private sector will pay as a UCR. This is the reason most doctors with a low volume of Medicare patients barely break even on them. Medicare often has limits as well on how many times a given procedure will be paid over a given length of time. A breast examination, say, will be paid only every other year. The patient organizations [such as AARP] will raise cain with the government if they believe that this standard will reduce the chance of catching breast cancer, and if they raise enough cain, it will usually be modified.
My secondary coverage is Medicaid, who is billed the 20% balance. Unfortunately, I have no way of knowing what they pay. In my state they issue nothing to the patient indicating what they paid or that they were even charged for anything. They call this “cost cutting”. Since I very rarely get any doctor bills, either Medicaid is paying the full 20% or the providers are writing it off.
The advantage of what I’m proposing is that since the government would be paying 60% of allowable on every procedure country wide, the public could be informed about what the Government things a fair and reasonable price is for every procedure. With that information, which you currently cannot get for all procedures, but only for the ones you have already undergone, you could actually comparison shop, and, since you are responsible for the 40% balance, the incentive to do so would be quite large.
Here’s exactly what you’re asking for, Heather.
Wolf Blitzer (!) asks the hard hitting question to David Alexrod. He totally flubs it.
http://www.youtube.com/watch?v=dYuasvdr3FY
Thank you very much. Appalling and terrifying. Market competition is just so ‘messy’!
But still no answer, as you say.
The short answer is “regulatory arbitrage”. All the insurance companies will move to the most permissive state and sell from there.
Proposals to “make insurance available across state lines” usually mean “without actually complying with the laws of the insured’s state that are written to protect the interest of the insured”. (Because, you know, that would just be too much paperwork. The idea of health insurance companies complaining about excessive paperwork is at least good for a laugh.) The idea looks a little less savory if you spell it out like that.
Actually, reviewing the thread, I see that #2 and #6 say substantially the same thing with opposite spins… and the author of #2 still wrote a derisive dismissal of #6, after admitting in his own previous post that companies would relocate to avoid “peculiar mandates”!
One person’s peculiar mandate is another’s human right obtained by the democratic process in their state.
Chris – see, I’ve heard this one before. It starts sounding a little strange if you think about it for a while. Do people in different states have different human rights? If we were going to do an “overhaul” of the healthcare system, why couldn’t we come up with a federal standard that all insurance companies could sell across state lines (not sure if I agree on this, but I don’t see why liberals don’t support it).
As for it being a humanitarian concern, doesn’t it seem a little backwards to restrict the market for cheaper and smaller products, and/or force everyone to buy a product from a private supplier (!), and expect the money to flow to the downtrodden instead of insurers’ pockets?
The advantage of what I’m proposing is that since the government would be paying 60% of allowable on every procedure country wide, the public could be informed about what the Government things a fair and reasonable price is for every procedure.
Look, if the government is paying for everything, then to keep those costs down, it will have to impose price controls of some sort. What if the government says $10,000 is a fair price for Procedure A, but Doctor X, who is the best at that procedure, wants to charge $12,000? Will the government still cover 60% of that higher cost? If so, then watch the prices climb, as people will still be disconnected from the direct cost. The other 40% can be covered by insurance–another third-party payer.
Ah, you might respond, the government can offer to only pay $6,000, or 60% of the original $10,000. Sure. But as it does this more and more doctors will cater to richer clientele who prefer to pay a premium. It’s not that doctors are any greedier than anyone else, but they’re human and they act on incentives like anyone else. This means there will be a smaller pool of doctors available for everyone else paying the government’s price, and thus begins the two-tier system you want to avoid (I presume). Or, the government can lay down it’s “fair” price as THE price by law, which is setting price controls.
Sheldon,
If paperwork concerns are genuine, then the federal government could allow companies and experts to collaborate and come up with a standard set of documents and required information.
Chris,
The only way the sort of abusive arbitrage you describe could take place is if the federal government did not regulate the interstate commerce. It has the authority to do that.
One person’s peculiar mandate is another’s human right obtained by the democratic process in their state.
Except many of those same states are trying to get the feds to bail them out the mess their “human rights” provisions have created. Liberals insist on making health care an interstate issue. Well, fine, so be it. We should then have the right to purchase insurance on an interstate basis. The fact that I’m prevented from buying insurance from a state next door from an American company strikes me as just as much a human rights violation as not having your marriage counseling subsidized by the taxpayer is to you.
Joseph,
In fairness, your plan does sound a lot better than many of the options being pushed.
This is a very easy one. Fifty states, fifty insurance regulatory bureaucracies staffed with drones, thousands of state level politicians getting a little on the side even if only in the form of jobs for their idiot nephews and nieces. Self Organized political troughs like that are very hard to modify. Even if the proposed new trough in Washington will be bigger than the total of those in the states there will be a different set of pigs enjoying the slops.
What if the government says $10,000 is a fair price for Procedure A, but Doctor X, who is the best at that procedure, wants to charge $12,000? Will the government still cover 60% of that higher cost? If so, then watch the prices climb, as people will still be disconnected from the direct cost. The other 40% can be covered by insurance–another third-party payer.
The point I was trying to make is that no carrier pays Doctor X any more than Doctor Y, already. Other than establishing medical necessity for the procedure, they make no medical judgments. Carriers hold no opinion about the “quality” of any one Doctor over another. Unless there is some obvious error, such as a pulmonary specialist sending in a podiatrist bill for cutting the patient’s toenails, [I’ve been in the business and occasionally things like that do happen.] the fact that a doctor is licensed to practice medicine in his state is sufficient for them to pay, and every other mark of superior quality he may stick up on the wall with his license and his degree is irrelevant.
And, at most, what a carrier will allow as a UCR is based on an evaluation of what every doctor in a given city is charging for that CPT code, and if Doctor X charges more, the carrier will not pay for the overage. None of them pay over a pre-determined allowable charge whether public carriers or private ones.
And when there is secondary coverage [usually a spouse’s policy that permits use as secondary coverage], the secondary coverage will not pay above the UCR either. If Aetna pays 80% of a UCR and the doctor charges more than the UCR, as secondary Nationwide will only cover the 20% that is still below the UCR. Neither carrier will pay the overage.
Currently the only difference between public and private coverage is that the patient is still legally liable for the charges that are above the UCR established by private carriers, but they are not legally liable for anything above the Medicare allowable charges.
If such a system as Medicare primary 60-40 and private secondary at 10, 20, or 30 of the allowable balance is put in place, some common UCR procedure for both public and private coverage will have to be established. What is important is that this standard be transparent to the public. If the AMA thinks the standard is too low, they can lobby to get it raised, if the private carriers think the standard is too high, they can lobby to get it lowered. And ordinary people needing procedures will finally have something to evaluate a doctor’s charge against before the procedure happens.
It is this lack of transparency that is the major stumbling block to true competition for patient business. Create it, and establish that the patient will always be responsible for 40% above the coverage floor, whether he pays it directly or obtains private secondary coverage, and you have basis for truly serious competition. And competition both between doctors for patients, as well as competition among carriers to write affordable secondary coverage.
“If paperwork concerns are genuine, then the federal government could allow companies and experts to collaborate and come up with a standard set of documents and required information.”
Paperwork concerns *are* genuine and a huge drain.
However, what’s the incentive for insurance companies to standardize? Standardization makes it tougher to lock in doctors to their network and reduces the entry costs of new providers.
I don’t think it’s the federal government getting in the way of standardized billing forms.