Fugly plans and new shiny objects

A few weeks ago, I wrote about how the incentive structure of private insurance that is mandated to take all applicants creates an incentive for plans to get fugly in their benefit design for known, high cost currently sick individuals.  This was most readily visible with how some insurers in some states treated HIV/AIDS drugs as all high cost tier where the patient was on the hook for the full cost of the drug until their out of pocket limit was satisfied.

Once one plan in a market decides to make themselves as unattractive as possible, every other plan has to either follow suit in making themselves unattractive or be willing to take on massive health costs as they become the preferred plan for HIV positive individuals…. a region will see either the “nice” plan become a “nasty” plan as a self-defense measure or that “nice” plan will leave the market so the new baseline is “nasty”. It is Gresham’s law for health insurance.

The easy and no way in hell it is happening any time solution to this problem is single payer as that removes the incentive to play buggar thy competitor.  The much more plausible solution is a regulatory solution.  And that is what it looks like will happen.

From the Washington Post:

Some plans are requiring patients to pay 30 percent or more for drugs that go for several thousand dollars a month. HIV drugs, certain cancer medications, and multiple sclerosis drugs are among them….

Although the law sets an overall annual limit on what patients are required to pay, the initial medication cost can be a shock….

For 2015, the administration says it will identify plans that require unusually high patient cost-sharing in states where Washington is running the exchange. Insurers may get an opportunity to make changes. Regulators will collect and analyze data on insurers’ networks.

This is a start but the problem with outlier analysis is that is presumes the outliers are the problem.  They can be.  But if there are local markets where all players went the fugly route at the same time, there are no outliers.  Stronger regulation, or clearer and faster risk transfer payments would be needed to minimize the incentive to create fugly plans. 

 

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13 replies
  1. 1
    Baud says:

    Maybe if more corporations find religion, we can get to a single payer system.

  2. 2
    Chris says:

    @Baud:

    My uncle has it all figured out that the nefarious secret goal of Obamacare is to make more and more people lose their private insurance so that public insurance is all they have left, and so eventually implement Single Payer.

    All I could think when I read that was “that… would actually be fine with me.”

  3. 3
    Baud says:

    @Chris:

    REVEALED: Obama’s secret plan to make you stop hitting yourself better off.

  4. 4
    RaflW says:

    @Chris:
    Well, corporate America’s nefarious plan has been to have more and more contract workers, part-timers, and whole classifications of workers who don’t get insurance (senior mgt will retain it’s generous plans, thank you very much).

    The jettisoning of work-based insurance was already under way, and was part of the reason we needed the ACA (or some other significant reform).

    Funny how the cause and effect has switched for folks like your uncle.

  5. 5
    pseudonymous in nc says:

    And in these situations, regulation should mean ‘a very big slap’ when it’s clear that the plans have been designed to soak people with chronic illness and expensive healthcare needs. Extracting the annual out-of-pocket from the already-sick by March instead of November is part of that. It’s accounting bullshit. If the annual out-of-pocket limits are to stand, then it may be necessary to chain them to a monthly out-of-pocket limit so that it’s no longer tied to profit/loss statements.

    The NFL changes its rules every year when teams have followed the letter of the law but crapped all over the spirit of the law. No difference here.

    This, I think, was the original sin of the ACA: making the people responsible for implementing the new plans the ones with an engrained culture of fucking people over. That might have been a pragmatic necessity because of “you get to keep your plan” for employee plans, but if you look at how private insurance is handled elsewhere, it’s generally with companies that have always had to work within a very tight regulatory environment and have never got into the habit of fucking people over as the way they do business.

  6. 6
    Kelly says:

    Could a federal drug formulary all providers are stuck with solve this problem? A fence here and fence there every few years and the insurance companies will be left with efficient administration of benefits as their only selling point.

  7. 7
    mazarey says:

    Decloaking for the first time in a good while. So far the ACA has been nothing but good for me.

    In late 2008/early 2009 I went through diagnosis, surgery and treatment for stage 1 thyroid cancer. Even though I have good insurance through my employer, I still struggled to pay the copays and out of pocket expenses. Being on 50% disability and still being expected to make payments on my medical bills created a lot of unnecessary stress and anxiety. I’m certain that the extra stress impeded my recovery.

    As I type this, I’m 2 days post op on a second neck dissection for a recurrence of the cancer. Thankfully, it’s still considered a stage 1 disease.

    As a direct result of ACA, the various tests, CT, PET and other scans meant that I already hit the out of pocket maximum for 2014. This means that I have no more coinsurance for the rest of the year. It was a huge relief at check in for the surgery to hear, “this is covered 100% by your insurance.” The next several months are still going to be a slog, but at least I don’t have to worry about any new medical bills for the remainder of year.

    The abolition of the lifetime caps is also a BFD. The first go around exhausted roughly a third of the cap I had at the time.

    I still want single payer. But anyone who says that the ACA hasn’t been a net positive is either ignorant, a liar or both.

  8. 8
    mazareth says:

    My correct username is “mazareth.”

    Thanks Obama!

  9. 9
    mclaren says:

    As usual Richard Mayhew never bothers to tell us how somebody making 175% of the poverty level, around $17,500 per year, is going to pay 30% of a $2000 monthly drug cost.

    Let’s see… That comes to $600 per month in drug costs, or $7200 per year. By my reckoning someone who makes $17,500 per year takes home about $13,125 per year, what with 10% for FICA and the other gigantic taxes Ronald Reagan heaped up on the middle class starting in the 1980s to fund his uncontrolled arms race. And of course there’s another 8% or so state taxes and a roughly equal amount for federal taxes.

    So we’re looking at someone who has about $5,925 left per year to pay for rent, food, transportation, etc. Meanwhile, the typical rent in a large city is around $1000 a month.

    How does that work, Richard?

    Wanna tell us?

    If there’s really “no way in hell” we’re going to get single-payer health care in this country, then what you’re really saying is “a lot of sick poor people are going to die because of Obamacare.”

  10. 10
    Richard Mayhew says:

    @mclaren: Cost share Silver would be the solution here. OOP would be capped for someone making 175% FPL at $1,000 to $2,000 (87% Acturial value) so yes, they would still be paying 11% to 12% of their income for their prescriptions, but it is not the number you are pulling out of your ass.

    Is it perfect, hell no — but is it far better than the pre-2009 status quo ante of “you’re fucked” hell yes. And is it reality instead of a hoped for single payer that never had 200 votes in the House or 40 in the Senate — yes.

  11. 11
    Richard Mayhew says:

    @mclaren: Please tell me how to get 218 votes in the House, 51 or 60 in the Senate, 1 presidential siganture and 5 votes on the Supreme Court.

    If you can come up with a plausible pathway within the next 5 years or hell, the next ten years, I’ll listen. You’re last attempt had the president threaten to nationalize the entire healthcare system. To me that is not plausible.

    And yes, poor people get fucked in America. Under PPACA, far fewer of them are getting fucked than they would have been in a non-PPACA universe. To me, that is a good thing. Not the best thing, but a significant improvement on the status quo pre-signature.

  12. 12
    mazareth says:

    @Richard Mayhew:
    Clearly it’s Obama’s fault for not leading with leadership!

  13. 13
    Fred Fnord says:

    What I don’t understand is, I have now had three different plans this year (employer, exchange, employer) and I have three different out-of-pocket maximums. That’s well over $10,000… plus a $750 deductible that doesn’t count towards the OOP maximum of one plan (plan started Dec 31, 2013 so they could keep screwing their customers as long as possible), plus drug costs on two plans, plus $500 in inadvertent out-of-network fees for a facility that was in-network but had out-of-network physicians that they didn’t bother to warn me about, plus $1800 in premiums.

    As far as I can tell, those who are laid off (and on an exchange plan briefly) and who do have any significant health problems, and who are not independently wealthy, are just totally fucked under the ACA. If my own health problems had been timed slightly differently I would be looking at almost $20,000 out of pocket this year, instead of ‘only’ $8000.

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