Sunday, October 23, 2005

When Health Insurance Is Not

The New York Times has an article on problems caused by inadequate health insurance coverage:

Being a Patient
When Health Insurance Is Not a Safeguard

Published: October 23, 2005

[...] The Dorsetts, Sharon and Arnold, were concerned about Zachery's health, but they were not worried about the financial consequences. They were a young, middle-income couple, with health insurance that covered 90 percent of doctors' bills and most of the costs of prescription drugs.

Then the bills started coming in. After a week in the hospital, the couple's share came to $1,100 - not catastrophic, but more than their small savings. They enrolled in a 90-day payment plan with the hospital and struggled to make the monthly installments of nearly $400, hoping that they did not hit any other expenses.

But Zachery, who was eventually found to have an immune system disorder, kept getting sick, and the expense of his treatment - fees for tests, hospitalizations, medicine - kept mounting, eventually costing the family $12,000 to $20,000 a year. Earlier this year, the Dorsetts stopped making mortgage payments on their ranch house, in a subdivision outside Indianapolis, because they could not afford them. In March, they filed for bankruptcy. [...]
This is exactly the kind of thing that got the attention of Physicians for a National Health Program, when they published a study showing that medical expenses are a major factor in many bankruptcies.

Not to worry, however, Congress is on the case.  

Not long after the PHNP study came out, Congress acted to tighten restrictions on personal bankruptcy.  Just to make things more perverse, they continue to permit corporations to use bankruptcy (permanent link here) to avoid their obligations to their workers.  

Now, we learn that Congress is not content with the current situation.  They want to make it worse.  According to a study by Mila Kofman, J.D.
(Assistant Research Professor, Georgetown University):
Association Health Plans: Loss of State Oversight Means Regulatory Vacuum and More Fraud
This report analyzes the impact of legislation introduced in the U.S. Congress (H.R. 525/S. 406) that would federalize the regulation of health insurance arrangements called association health plans (AHPs). It concludes that by exempting AHPs from state oversight, the legislation would create a regulatory vacuum and allow scam operators to use new federal AHP preemption provisions as a shield to avoid regulation and oversight. As a result, the passage of this legislation would have the unintended consequence of widespread fraud threatening the coverage and financial security of millions of Americans.

There has been a 30-year history of health insurance scams involving associations and multiple employer arrangements. Scams flourished after Congress exempted these arrangements from state oversight in 1974 through the Employee Retirement Income Security Act (ERISA). Operators targeted small businesses and self-employed people through legitimate and phony associations. They collected premiums for non-existent health insurance, did not pay medical claims, and left businesses, workers and providers with millions of dollars in unpaid bills and patients without health insurance coverage. The U.S. Department of Labor, having the responsibility for oversight, was not able to protect businesses and their workers. [...]
HR 525 has passed, with little fanfare.  S. 406 is pending.  

Kofman, being an attorney, analyzed the legal aspect of the legislation.  But that is only part of the story.  The loosening of regulation of AHPs would permit greater exposure of patients to uncovered medical expenses.  It would permit health insurance plans to impose greater restrictions on coverage.  According to the Congressional Budget Office, the legislation could result in higher premiums for 80 percent of small businesses.  In addition, there is evidence that AHPs would increase the number of persons without health insurance.  

It light of these findings, it really is rather mysterious why Congress would think this is a good idea.  Patient advocates (i.e. every one who possesses a body) might want to consider asking their Senators to oppose S. 406.

Categories: medicine, politics
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