Health Care Special Session Update - A Document Appears

So out of the "magic fax" in Sacramento where all bills without authors are created comes new "legislative language" on a compromise health care proposal, language that nobody has claimed as their own and that everyone is disavowing, but which looks mysteriously like the Governor's handiwork. You can take a look at this language yourself here.

We are disappointed that we seem to back to square one with something very similar to the Governor’s January proposal, with only a few of our comments and concerns raised over the course of the year addressed. While we would have preferred having the Governor’s language much earlier in the year, we do appreciate having the language to seriously respond and react to--if that is what it takes to move the conversation forward.

It's like when you work really hard on a document, but then the computer crashed, and you have to reboot and start again. It's frustrating, but the goal doesn't change.

This could have played out over the regular session if the governor would have distributed this and negotiated at that time. But as he jets off to China, this gets dropped in everyone's lap - and look what's in there:

• The elimination of quarterly complaint and greivance reporting for HMOs, which seems to remove an important oversight over insurers.

• The apparent increase in the permissible premium, for those making 150-200%FPL (federal poverty level), at a level that is still too high--5%, which does not include out-of-pocket costs.

• The lack of any standards for out-of-pocket costs in the subsidized pool. Given that one can drive the cost of a premium down by raising deductibles and cost-sharing, the limit of premiums provides small comfort.

• An exemption from the minimum level of coverage for any and all employer plans. The draft still has, as a placeholder, an unacceptable $5,000 deductible (and $10,000 out-of-pocket max) plan as a minimum level of coverage under the individual mandate... but that even that low minimum does not apply to individuals who take up employer-based coverage, meaning they could have coverage with very skimpy benefits, or no out-of-pocket maximum.

• A weak definition of the minimum Medical Loss Ratio (the amount spent on patient care rather than administration and profit), so that it applies to an insurers’ entire portfolio of business, meaning this rule would no longer provide assurance that any specific product is of good actuarial value. A limit that was product-by-product, or even market-by-market, would be more helpful to consumers.

• The Healthy Action benefit seems to be less than advertised as well, since it only requires an insurer to offer such a product, but does not include smoking cessation or obesity programs as a mandated benefit. With no requirement, the policy seems more likely to be a way for insurers to identify risk, rather than a viable new benefit for consumers. If this is truly a priority, it needs to be a mandated benefit.

• And most concerning, the guaranteed issue protections in the individual market seem hollow with the new details. Only a few high-deductible, low-benefit products will be guaranteed issue to begin with--so those with "pre-existing conditions" will only have access to the coverage in the market that is least suited to them. There would be little assurance that we would ever get to a second phase of having the full market guaranteed issue. Insurers will be able to use benefit design, marketing, and pricing to avoid those California customers that have health risks and needs. In particular, we believe older Californians will simply be priced out of the individual market, and the guaranteed access an illusion.

I can live with an individual mandate if it included guaranteed issue and significant cost controls, in addition to a baseline of coverage for the insured and a cap on prices. But this proposal seeks to eliminate practically all of those checks on the insurance companies while maintaining the individual mandate. This is nothing but a license to print money for the insurers.

Since nobody will claim this document, it's hard to know whether or not this is the result of any negotiation or if it's the Governor's response to AB8. Therefore, it's hard to know whether or not the end result will be something in the middle, or something pretty close to this orphan document. If the latter is the case, health reform should be torpedoed in the special session without delay. These terms are unacceptable.