In the Nation's Interest
Playing Hot Potato and Musical Chairs with Healthcare
by Joe Minarik March 27, 2017
Do you remember the old parlor game, “hot potato?”
How about “musical chairs?” Both were parts of true Americana in which one person tried to stick another with a bad thing – either holding the hot potato, or standing up instead of sitting comfortably when the music stopped.
The problem is that we now take that same American spirit – probably a second cousin of our litigious nature – into our healthcare system.
Everybody wants to pay little or nothing when we’re healthy, but to have everyone else pay our bills when we’re sick. Well, guess what: It can’t work that way.
Consider the House health care bill, the American Health Care Act(AHCA), which just failed because it ignored the laws of physics – and simple economics.
Problem number one: The broad brushstrokes of the AHCA would paint the health care system into a corner. The bill insists that individuals must be free to say “no” to insurance coverage. But those who sign up must be free from any rate discrimination for their pre-existing conditions. The sad but inevitable reality is that those imperatives are incompatible.
If all are free to go without insurance unless and until they are sick, only the sick will buy insurance. And insurance among only the sick is like no insurance at all. First, rates will be too high; then the healthiest in the pool will drop out; and then the rates go even higher. The system will break down, as it always has when such conditions have been allowed.
The watchword of the AHCA is “freedom.” That is, Americans must be free to turn down insurance coverage and to save themselves the premiums – and when inevitably some of those people are unexpectedly sick, they are “free” to go to the emergency room and stick their prudent countrymen who purchased insurance with the bill.
Then, later, those formerly uninsured sick people can go and buy insurance – no harm, no foul (or so they would assert).
In short, the AHCA encourages the American people to try to pass the cost of their health care off onto someone else – like a game of hot potato or musical chairs.
Problem number two – a first cousin: The AHCA would give back to the states (restoring pre-Obamacare rules) the right to determine what illnesses health insurance must cover. This is a one-way ticket to eliminate coverage for 10 Obamacare essentials (which include maternity care, mental health, prescription drugs – even hospitalization).
The problem is that insurers always can cut premiums by dropping coverages for some conditions. An insurer stops paying for maternity, posts a lower premium, and people with no plans for childbearing will flock its way (along with some prospective parents who just don’t read the fine print). This puts even the best-intended insurers in a bind. No one wants to offer the only plan that covers maternity services; you’ll get stuck with all of the childbirth expenses, and you’ll go bankrupt.
So if a state makes childbirth coverage an optional extra, it can be a political win, because it reduces premiums. But it sends a clear signal to every plan not to cover maternity care. Before 2014, only 12 percent of insurance plans outside of employer coverage offered maternity benefits. If you were young and hoped to build a family, and your employer didn’t offer insurance, you were out of luck.
In the face of today’s opioid epidemic, dropping coverage for mental health and addiction treatment would be socially destructive – but good, even required, business practice, if your state allowed it. And the more services that the states make optional – even hospitalization – the more signals it sends to insurers to drop coverages.
To avoid such a game of hot potato, there must be standards, and they must be more inclusive than not. For all of Obamacare’s flaws, it took on this question.
The AHCA, in contrast, would pave the road for such a race to the bottom.
What is the takeaway? Instead of making our health care system a nationwide game of musical chairs, we need to face the music, and build a system that works like it was designed on purpose.
Give people single-purpose, refundable tax credits so that they can afford less-expensive basic plans. That means that plans can meet a realistic list of required coverages and still remain competitive. Levy the taxes needed to fund the credits. Stop pretending that each of us can pass the hot potato off to someone else for our entire lives. And remember that what we pay in taxes, we don’t have to pay on our own in premiums.
Give people choices among different kinds of plans. Do you want to choose your own primary care physicians, specialists, and hospitals? Then you want a wide-access plan. Would you rather work with an integrated network of doctors and facilities?
Or do you want a high-deductible plan with a health savings account? Not everyone agrees. People should be able to choose the kind of care they want.
And there should be choices of each kind of plan. Let different plans compete for your tax credit. If one integrated network doesn’t give you the care you want, switch to another.
The nation does need to address the healthcare cost and coverage crisis. We can’t just “move on.”
When we stop playing games trying to foist the costs onto someone else, there are some clear solutions to choose.