As with most things in life, when it comes to health insurance, we get what we pay for – mostly. But in this case “we” tends to mean the collective we, rather than each individual person. We can pay premiums on the low end of the spectrum in trade for high deductibles, or we can choose plans with lots of bells and whistles and pay a much higher premium. These are individual choices, and even when a person is getting health insurance through an employer, there are usually higher and lower cost options available.
When we consider mandates, the result is generally higher premiums for everyone, and a greater benefit for the collective population – but not necessarily for each member of the population. In states where health insurance is guaranteed issue, there is absolutely a benefit for people with pre-existing conditions, but there is also a tremendous cost in terms of higher premiums for everyone in the state.
In Colorado, lawmakers tried to pass a bill this month that would have halted new mandates for a year, but it died in committee last week. This was followed closely by the passage of a bill introduced by Diane Primavera that will make medically necessary oral chemotherapy a covered expense on health insurance policies. Primavera had introduced a similar bill in last year’s legislative session, but it didn’t pass. This year’s version is likely a less costly mandate, since it includes the stipulation that the oral chemotherapy must be medically necessary in order to be covered. The focus of this year’s mandate was on saving lives, whereas last year’s bill was intended to expand treatment options and make life a little easier for cancer patients.
As soon as the Colorado legislative session got underway last month, there were several bills introduced that focused on health insurance. It’s easy to see injustices in the health care delivery system, and it’s natural to want to remedy them. When we see a person suffering from ill health and also struggling to pay medical bills, it’s easy to understand how lawmakers want to mandate more comprehensive health insurance coverage for everyone – nobody should be bankrupted by medical bills or have to choose between getting treatment or having a place to live.
But the cold reality of money is hard to ignore. The fact remains that every time we mandate additional benefits for health insurance coverage, we drive premiums up for the whole population. And that invariably results in some people – who may have been right on the brink of being able to afford coverage in the first place – opting to go uninsured. Which perpetuates the cycle of increasing costs for everyone in order to cover provider losses incurred in our overflowing emergency rooms.
But what if we tried to find a middle ground between those who would like to see every health condition fully covered by health insurance and those who can only afford basic premiums (and thus basic benefits)? Maybe we could implement a system whereby all policies had to have a deductible of at least a certain amount – a minimum out of pocket. We could eliminate policies with very low deductible and copays, but do so gradually, with annual deductible increases. As out of pocket expenses increased, premiums would decrease. Of course one of the problems with high deductible, low premium policies is that people often don’t have money saved to cover out of pocket expenses when they have a claim. I can see a few ways around this. One, we could allow anyone – regardless of what type of health insurance they have – to open a tax advantaged health savings account (HSA). The money deposited into the account would be tax deductible, and would be available when medical expenses arose. A second option would be to create “forced” savings accounts and payroll deduct a small amount of money – sort of the way we do now with things like social security and Medicare taxes. This money would be held in an account in the employee’s name, and would be available if needed for medical expenses. If it were not needed, it would belong to the employee upon retirement. To be fair, these accounts should be tax deductible too, and could be waived if an employee showed proof of having their own HSA. A third option would be a low-interest loan available from the government to help people pay their deductible.
I’d like to see a compromise between people who have health insurance that covers everything with very low out-of-pocket exposure, and those who have minimal coverage and huge financial exposure in the event of a serious illness. Most of the very high end policies are group coverage, and are usually funded in large part by employers, which means that a lot of people truly have no idea how expensive their health insurance is. And a mandate that increases coverage and cost is likely to be felt more by the employer than by the employee. But it will be felt especially hard by people who pay for their own health insurance, with no help from an employer.
We cannot continue to just tack on more mandates that increase health insurance benefits without addressing the inevitable premium increases that will follow. We absolutely need to address the problem of people facing staggering bills when a medical condition is not covered at all by their health insurance, but if we continue to add mandates without looking for ways to bring down costs, we’re only going to push more people into being uninsured.