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GOP Health Reform: “The Insurance Industry Profit Enhancement Act”

By       Message Richard Wise     Permalink
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At last House Republicans have presented their version of health care reform. At least, they presented a one-page summary of what they say their bill will contain; I have not seen the final bill yet.

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The timing of the release -- Election Day -- was inauspicious. Or maybe "suspicious" is a better word: what better day could there be to release a plan so devoid of substance if you wanted to attract minimal attention to it from voters and the media?

Republicans are Past Masters in the art of semantic deception (think "USA Patriot Act" or "compassionate conservative") so it's no surprise that nothing in their 10-point plan is exactly -- or sometimes even remotely - what it appears to be. For that reason, I lay out here the main provisions of the GOP Health Reform Plan and then comment on what each one actually means.

These points are not listed in the order they appear in the summary document. I have regrouped them to make clearer what I believe to be their true intents and impacts.

For example, several GOP proposals are aimed directly at increasing corporate profits:

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Republicans want to establish Universal Access Programs to guarantee access to affordable care for those with pre-existing conditions. These "Universal Access Programs" are high-risk pools and reinsurance programs. The key word here is "access," not "affordable." If you are denied health insurance, you can always go into the high-risk pool.

Of course, the cost will be have to be higher because the risk is higher (if that were not true, it would amount to a financial incentive to engage in risky health behaviors like smoking or eating Big Macs). And if you can't afford the high-risk pool, well, that's your problem. The Republicans guaranteed you "access" and that's what you got.

The GOP says it will prevent insurers from unjustly canceling a policy or instituting annual or lifetime spending caps. And what constitutes a 'just' cancellation, you might ask? They cite two: fraud and "conceal(ing) material facts about a health condition." In other words, failing to disclose a pre-existing condition. If you have a pre-existing condition, you belong in the high-risk pool and out of the preferred risk pool you will go.

I have no doubt the industry will respond appropriately (that is, through pricing) to the prohibitions on annual or lifetime coverage limits.

The Republicans plan to allow Americans to buy insurance across state lines. At first blush, that might not seem like a bad idea, especially in states where a handful of companies dominates the marketplace. The drawback is that the fiercest competition for increased market share will be aimed at the youngest, healthiest, and lowest-risk prospects. That will drive up insurance prices for everyone else -- especially those in the high-risk pool - because the insurance companies are not about to sacrifice revenues for market share.

What's more, the ability of people to buy insurance across state lines does nothing to address the many defects in the present system and product offerings. Offering the consumer 10 ways of getting screwed instead of three is not offering him anything he really values.

There is one other not-insubstantial detail: insurance is regulated by the states. The federal government may allow you to buy insurance across state lines, but state Insurance Departments will decide who is allowed to sell insurance in their states. There has been discussion of possibly overriding some state insurance regulations but we can expect states to push back hard against any such provisions.

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The GOP promises to end junk lawsuits. This is a popular refrain for Republicans but it remains infested with problems for everyone except corporate America. Tort reform provisions will place roadblocks in the way of people filing malpractice claims; will place a $250,000 cap on awards for non-economic damages like physical or emotional pain and suffering; and will limit attorneys' contingency fees. The main effects of these 'reforms' will be to deny deserving plaintiffs their days in court and deny just remedies to patients injured by medical malpractice, while limiting the accountability of health care companies and practitioners.

The effects of these four points of the GOP health plan would be to increase insurance company revenues and profits while doing nothing to provide better coverage to more Americans at lower cost. I know, I know: I'm shocked, too.

Republicans say their version of health care reform will require no tax increases. But some of their provisions will increase federal costs. Continuing their long-standing practice, Republicans will just spend the money anyway and add the cost to the already-burgeoning national debt. Specifically:

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Rick Wise is an industrial psychologist and retired management consultant. For 15 years, he was managing director of ValueNet International, Inc. Before starting ValueNet, Rick was director, corporate training and, later, director, corporate (more...)

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