Charlie Baker with Harvard Pilgrim Health Care recently posted an interesting observation from Massachusetts’ experiment in requiring everyone to purchase health insurance:
A few months ago, brokers started posting comments on this blog site that implied that people – and some brokers and employers – were gaming that wide open front door – purchasing health insurance for a few months at a time, using a lot of services, and then dropping their coverage. The penalty for not having coverage isn’t all that steep – about $900 – and while a few months of coverage might cost $2-3,000 in premiums – that’s peanuts compared to the cost of many medical services, which can run into thousands of dollars in a matter of days.
After about the fifth broker comment, I asked our finance people to check and see if individuals purchasing insurance from us either directly or through the state’s Connector web site were buying for a few months at a time, and using a lot of services. The results were astonishing. Between April of 2008 and March of 2009, about 40% of the people who purchased individual insurance from Harvard Pilgrim stayed covered by us for less than 5 months. Even more amazing, they incurred, on average, about $2,400 per person in monthly medical expenses – roughly 600% higher than what we would have expected. It wouldn’t surprise me if other health plans have the same problem.
This is a problem. It is raising the prices paid by individuals and small businesses who are doing the right thing by purchasing twelve months of health insurance, and it’s turning the whole notion of shared responsibility on its ear. It’s also created a new way for people who don’t want to play by the rules to avoid them. The state needs to reconsider its policy to eliminate waiting periods and/or pre-ex exemptions for individuals purchasing health insurance in the merged market. That would be the simplest and easiest way to protect individuals and small businesses who are playing by the rules – and limit the very costly impact of this wrinkle in health care reform.
It is perfectly natural that consumers find preexisting condition exclusions or waiting periods for eligibility in health insurance troubling. However, those provisions exist for a reason.
Perhaps this cautionary tale from Massachusetts can serve as an example of why, if federal health care reform includes some form of universal availability, participation must be made mandatory (with the exception of those religious groups where conscience prohibits insurance), and the penalties for nonparticipation must have teeth.
Otherwise, considering the costs involved, people will game the system, and honest taxpayers will pick up the bill.
Similarly, while it’s appropriate to temporarily suspend preexisting condition clauses and waiting periods to permit people to buy into a mandatory coverage system… those provisions probably ought to exist after the phase-in, at least as regards to people who should have coverage under the mandatory system.
“Participation must be made mandatory (with the exception of those religious groups where conscience prohibits insurance)”.
A lot of people would change religions, don’t you think?
@Annalee: I’m sure that the Amish will appreciate their new0found popularity.
Being Amish means being part of their community. If the Amish community decides that a member requires medical care, the community pays for the care, with all members of the community contributing according to their means.
On the other hand, you could be Christian Scientist, but then that means you refuse all health care, and pray to God to cure you. The cost of an ER visit would be fairly low; once they are identified as a Christian Scientist, the patient can be escorted to the chapel, and the chaplain called to join in the prayer.
In thinking about the matter of high deductable policies, it occured to me the too common uncompensated care of those covered by such policies is to require that the insurer pay whatever bills are incurred by the patient, with the insurer taking the responsibility for collecting on the $3000 or $5000 deductable. My guess is insurers would find high deductable policies to be too costly to write.
However, it seems to me that my idea can be applied to pre-existing conditions, but in this case with the tax collector being the bill collector. In addition to the tax department collecting the fee on the uninsured to pay for the care provided to the uninsured, when someone buys a policy with a pre-existing condition, or incurs costs in excess of a certain level within the first several months, the insurer would bill the tax department which would then collect from the tax payer-patient. The tax collector has greater power to collect than any non-government agency, and the legislators can set the rules so that the amount collected doesn’t exceed a certain amount of income, so the bills would be spread over a lifetime if necessary.
I believe the solution employed in Germany or Switzerland is that one must commit to the policy for three years, which I think is intended to allow a plan to both implement its health initiatives and then benefit from them. Someone who is required to stick with a plan for three years will either find their lifestyle coaching, or whatever strategy is employed agreeable, or not, and if not, then the plan isn’t compatible with the patient and probably would be happy to see them leave to another plan.
Again, it seems to me that the tax department can play a role in enforcing the rules.
But in any case, I think the doctors, hospitals, et al, should be out of the bill collection business and focus on providing maximum health possible with the agreed to prepaid health care.