Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 17, 1994 TAG: 9408170094
SECTION: NATIONAL/INTERNATIONAL PAGE: A-2 EDITION: METRO
SOURCE: By R.A. ZALDIVAR KNIGHT-RIDDER NEWSPAPERS
DATELINE: WASHINGTON LENGTH: Long
The devil's in the details.
If you think the health care debate is about insurance coverage for all and whether employers should be required to pay for workers' insurance, look deeper.
Many technical issues could affect your budget and the quality of care for your family.
``We're about to do health reform here, and there are 20 sub-issues having the potential for major dislocation that are not getting attention,'' said Bob Laszewski, a consultant to insurers.
The health care system already is pretty complicated, and reformers run the risk of creating new problems as they fix existing ones.
Sen. William Cohen, R-Maine, says most of his constituents have no idea what devils lurk in the details of health reform. Unfortunately, he adds, neither do many lawmakers.
That's not reassuring. There is plenty of precedent showing that laws can backfire. Cohen cites the luxury tax on boats that Congress passed in 1990. It was intended to soak the rich; instead it put yacht builders out of business. (The tax was repealed last year.)
``We aimed at the wallets of the rich and hit blue-collar, middle-class workers in the neck,'' Cohen said. ``We put them out of work because we were trying to tax the rich. And this [health care] legislation runs the risk of hitting those same people.''
Here are a few of the proposals in the congressional health reform bills that could lead to problems:
Tax on costly plans
Senate Democratic Leader George Mitchell's bill would impose a 25 percent tax on high-cost insurance plans. The tax would be applied to the amount by which a plan's premiums exceeded a target based on local health care costs.
It's meant as a cost-control measure to crack down on wasteful insurance plans.
But Bill Custer, a senior analyst at the Employee Benefit Research Institute, said the tax could have the unintended effect of penalizing health plans whose patients tend to be older or sicker than average.
Custer also is worried that insurance plans will cut corners on patient care as they approach the threshold at which the tax would be imposed. ``Whatever they pass is likely to have some unintended consequences that will have to be addressed by future Congresses.''
Community rating
Health insurance originally was sold at the same ``community rate'' to everyone in a given area. As health care costs rose during the '70s, insurers began offering discounts to firms with younger, healthier workers. Insurance got more expensive for older, sicker people who needed it most.
There's a consensus in Congress that America should move back toward community rating.
But some lawmakers worry about raising rates sharply for young, healthy people. That might force the young - who tend to use fewer medical services - to drop out of the system, making it more costly for those who remain.
Senate Minority Leader Bob Dole, R-Kan., would allow a 4-to-1 spread between what insurers can charge their oldest group of enrollees and their youngest. Mitchell would allow a 2-to-1 spread. The House Democratic bill would go back to traditional community rating, under a system that would require coverage for all Americans.
No one can say with certainty which is right.
``You've got to balance the number of people covered with their ability to drop in and out of the system,'' said Laszewski, a former insurance company vice president. ``You can't go from real wide differences to no difference overnight, because the young people we need to see in the pool are going to walk away.''
Medicare Part C
The House plan would create a new government insurance program along the lines of Medicare for low-income people, the unemployed, and workers in companies with fewer than 100 employees. Some experts predict that about half the country eventually would be covered under the new federal plan.
Part C would allow beneficiaries a wide choice of doctors, and pay physicians according to a set fee schedule. The financial incentive for doctors would be to perform more services to make more money.
Meanwhile, private insurance would continue its shift toward managed care plans that cover all of a patient's medical needs for a set fee. The financial incentive for doctors is to perform fewer services to make more money.
Gail Wilensky, who ran Medicare in the Bush administration, says the result would be ``schizophrenia.'' For instance, doctors might ask Part C patients to come in more often than privately insured patients, whether they needed to or not.
``You're talking about half the population, and absolutely opposite economic incentives,'' Wilensky said. ``I think it's going to make the people providing medical services a little bit crazy.''
Bureaucracy
Health care in America already is more bureaucratic than in many other Western countries, a fact that's underscored by high administrative costs. But for most working-age people, it's private bureaucracy they must contend with.
The congressional health reform plans add new federal and state bureaucracies and hold out the promise of trimming some of the private administration.
The Mitchell plan would create new federal agencies to define a standard benefits package, monitor coverage and costs, and carry out an overhaul of graduate medical education. State agencies would have critical new roles in determining who would be eligible for subsidies to buy insurance and in overseeing the health insurance industry.
The nonpartisan Congressional Budget Office warns that the state bureaucracies are potentially the weakest link in the system. ``It is doubtful that all states would be ready to assume their new responsibilities in the time frame envisioned,'' said the office's report on the Senate plan.
Subsidies
Democrats and Republicans agree that poor people should receive government subsidies to help them buy insurance. The Senate plan proposes more generous subsidies for pregnant women and children, a policy lawmakers support on humanitarian and public health grounds.
But Marilyn Moon of the Urban Institute think tank says that would provide different levels of subsidies to families making roughly the same amount of money. It could turn the subsidy system into an administrative nightmare.
``Every family would be a pretty unique situation. You can imagine having a look-up book that would have thousands of entries.''
by CNB