What Happens if Nothing Happens?
By Mike King
With the House and Senate health care reform bills stalled and Republicans insisting that the only way to get the reform effort moving again is to go back to square one, there’s a good chance that nothing will be accomplished during this election year. Opponents of health care reform, the Tea Baggers and a host of conservative pundits are OK with that, arguing that the system is not that flawed and that, given the national economy, the country can’t afford to do much else now.
But the cost of doing nothing will be substantial, as seen by recent developments in New York, California and Georgia.
Last week’s Georgia State University report showed that the ranks of the uninsured swelled in 2008 to 1.67 million Georgians, an increase that took place well before the worst of the recession in 2009 when unemployment spiked above 10 percent. The hardest hit were workers at companies that employ fewer than 25 people, where business owners dropped health insurance plans that they could no longer afford. The state now ranks 9th in population but fifth in the number of residents without health insurance. This trend line has been going on for several years now. The recent efforts by the Georgia General Assembly to deal with the problem — by offering tax breaks to small businesses and individuals who purchase lower cost, high-deductible insurance plans combined with tax-exempt health savings accounts — have had no appreciable impact on the trend.
Meanwhile, as stimulus money runs out, the Medicaid rolls will continue to swell, leaving the state to pick up a higher percentage of the cost of providing coverage for the poorest of Georgians. The bills before Congress promise to pay 90 percent of the cost of expanding Medicaid in the states to more low-income residents, but if they aren’t approved, Georgia will have to pick up a much higher percentage of the cost for residents who qualify for the program under current income guidelines. That’s led to Gov. Sonny Perdue calling for a tax on the state’s hospitals and managed care insurers to offset the increasing Medicaid costs. If his plan goes through, it’s not unreasonable to think that many of those hospitals and insurers will pass on the cost of higher taxes in price increases to patients with insurance, thereby boosting the unsustainable “cost shifting” within the health care financing system that has caused much of the problem the reform effort is attempting to solve.
Evidence of that has already shown up in New York and California.
A major struggle between UnitedHealthcare and a consortium of big New York hospitals represents the kind of ongoing arm wrestling that will continue to take place if insurance reforms aren’t enacted. As reported in The New York Times, the standoff is over, among other things, what the hospital must do if a UnitedHealthcare patient shows up in the emergency room. The insurer wants to be notified quickly of a patient’s hospitalization to determine if it is medically necessary. If not, it told the hospitals, it will cut reimbursement rates for services provided to the patient in half. It’s unclear whether the patient who happens to be caught in such a dispute would have to pay the difference out of his own pocket or the hospital would have to eat the difference. But it’s important to remember that nary a government bureaucrat is involved in this free market dispute. Insurance bureaucrats and hospital bureaucrats will be skirmishing more and more in the absence of some regulatory authority that protects patients from the warfare between insurers and providers. (For a Georgia example of this, think about the dispute between Blue Cross and Blue Shield and Piedmont Hospital a few years ago — where thousands of Blue Cross patients were told to find non-Piedmont doctors — because the hospital and the insurer couldn’t agree on a new contract. They eventually worked it out, but without substantive reform, such disputes will no doubt get meaner and more frequent and leave patients trapped in the middle.)
More recently The Los Angeles Times reports that Anthem Insurance in California proposes a whopping 39 percent increase in premiums staring March 1 for some of the state’s 800,000 individual policy holders. The staggering increase has drawn the attention of state regulators as well as the Secretary of Health and Human Services Kathleen Sebelius. Bear in mind that Anthem is a huge, for-profit insurance company; not one of these fly-by-night, street-corner-sign private insurance vendors that rip off their subscribers with low cost policies that basically cover nothing. Anthem says that the increase is justified because more and more of its individual policy customers are sicker and need more medical services.
That’s what happens without health care reform. That’s what’s been happening for the last 20 years.
Mike King is a retired journalist who specializes in writing about health policy issues. He also serves as editor and administrator of the Healthy Debate blog.
