Friday, December 18, 2009
CHICAGO TRIBUNE
WASHINGTON — When Senate Democratic leaders agreed this week to remove a new public insurance plan from their massive health care bill, they did more than quash a liberal dream.
They effectively pinned their hopes of guaranteeing health coverage to all Americans on a far more conventional prescription: government regulation.
The change sprang from a political compromise to placate conservative Democrats who were wary of a new government program. But shorn of a public option, the Senate health care bill has reverted to a long-established practice of leveraging government power to police the private sector, rather than replace it.
There is reason to believe that could work, many analysts believe. “In other areas, we accept that government ownership is not necessary to achieve many of the goals of consumer protection,” said Paul Starr, a liberal health care scholar at Princeton University.
Much as government now oversees the food Americans eat, the cars they drive and the banks where they deposit their money, regulators could ensure that all Americans have health plans that protect them when they are sick.
The expanded regulation of insurance programs could ultimately ripple through the entire health care system, affecting how doctors, hospitals and other providers care for their patients.
The Senate health care bill envisions, for instance, that regulators will eventually define the basic contents of policies that insurers offer, including detailed services such as immunizations, colonoscopies and HIV testing.
But the success of this approach will now depend on whether regulators have enough authority to control the insurance industry and whether the industry can find loopholes to evade them.
Those questions have received considerably less attention than the ideologically charged battle over a new government insurance plan. Yet they may ultimately determine the impact of the health care overhaul being sought by the president and his congressional allies.
Democrats in the House and Senate have filled their bills with a dizzying array of new rules and regulations for insurers. The insurance market provisions in the Senate bill alone run to nearly 400 pages.
Insurance companies would be prohibited almost immediately from rescinding policies for people who get sick and imposing lifetime limits on how much they will pay for their customers’ health care.
And state and federal regulators would be required to set up procedures for reviewing how much insurers charge their customers and whether premium increases are justified.
An even more intense round of regulation would begin in 2014, when states set up new insurance marketplaces, or exchanges, where insurers would be required to sell plans to millions of people.
who do not get coverage through work.
Companies for the first time would have to offer policies to all customers, regardless of their health status. Insurers could not charge older people more than three times what they charge their youngest customers, an unprecedented national restriction on what is known as age-rating.
Every insurance company that offers a plan on these exchanges would have to provide a minimum set of benefits determined by the U.S. Dept. of Health and Human Services.
“In any other year, these changes would be cause for a White House signing ceremony with bands and fireworks,” said Bill Vaughan, health policy analyst for Consumers Union.
Like any regulatory framework, however, this one has holes.
Provisions in the Senate bill that authorize insurance companies to sell nationwide health plans may allow insurers to skirt existing state regulations that require insurers to cover many medical procedures, critics say.
The legislation would only ban insurance companies from placing “unreasonable” limits on annual benefits that they pay, a vague standard that patient groups fear could effectively allow the kind of caps that now leave some consumers with gargantuan medical bills, even if they have insurance.
Others consumer advocates worry that the bill gives too much authority to state officials to regulate insurance markets at a time when some state leaders have vigorously criticized the proposed health care overhaul.
Still others are concerned that there are insufficient protections for consumer against high premiums even though millions of Americans for the first time would be required to buy medical insurance.
Although the bill requires state and federal regulators to review rate increases, it is still unclear how the regulators would evaluate what insurers want to charge and how aggressively they would restrain the industry.
“The public option was really the best check on the industry,” said Jerry Flanagan, patient advocate for California-based Consumer Watchdog. “Though it was small, there was an implicit threat to the industry that it could be expanded. ... And, unlike regulation, it allowed people to vote with their feet and go somewhere else if they didn’t like what insurers were doing.”
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Consumer Watchdog, the American Cancer Society and other advocacy groups have been working with Democrats on Capitol Hill to close some of these loopholes and tighten the regulations before the Senate passes a final bill.
Majority Leader Harry Reid, D-Nev., is expected to include some regulatory tightening in a package of changes to the Senate health care bill he plans to unveil this weekend.
But Reid is unlikely to have a complete solution for the challenge that has confronted regulators since Progressive reformers pushed government a century ago to require that meatpackers divulge what they were stuffing into their sausages.
Regulators are in a perpetual race to stay one step ahead of the industry they oversee. And if the president signs a health care bill next year — no matter the fate of the “public option” — lawmakers, insurance companies, patient groups and consumer advocates will likely be debating insurance regulation for years to come.
“All of us will have a lot of work to do after the legislation passes,” said Ron Pollack, executive director of Families USA, an influential Washington-based consumer group.
“We’ll have to monitor what is happening state by state. To the extent that insurance companies fail to adhere to rules, we’re going to have to get that fixed. ... But Rome wasn’t built in a day.”
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(c) 2009, Tribune Co.
Distributed by McClatchy-Tribune Information Services.