BG1196es: How To Deal With Public Concerns About Health Insurance

June 24, 1998 4 min read Download Report

Carrie Gavora

Research Associate

In recent months, the pressure on Congress to "do something" to deal with public concern over the supposed shortcomings of managed care and other features of the American health care system has been growing. The result has been a number of bills that would impose additional mandates requiring health plans to provide certain services, specify a set of "patient rights," and open up health care to more litigation by consumers.

Typically, in its well-meaning legislative effort to fix a problem, Congress will begin by misdiagnosing the problem. Then it will offer a solution that does very little to ameliorate public concerns and, worse, introduces new problems into the system.

The very fact that many lawmakers today think that the key to improving health care is for people to sue health providers should cause any sensible American to pause and wonder whether there is a better way. There is.

POSITIVE STEPS TO
MEANINGFUL HEALTH CARE REFORM

To solve this problem, Congress needs to concentrate on the cause, not the symptoms. Three actions are needed:

ACTION #1: End the tax bias against family-owned and family-chosen health plans
Congress can take two simple steps to end much of the tax discrimination against family ownership of health insurance:

Allow individuals who do not have access to employment-based health coverage to deduct 100 percent of their health care purchases. A refundable tax credit would be preferable, but this change would be a good first step to restoring tax fairness to working Americans.
Allow individual workers in company-sponsored health flexible spending accounts (FSAs) to roll over, penalty free, the unused funds in these accounts at the end of the year. In addition, lawmakers should address deficiencies in the medical savings account (MSA) law passed two years ago as part of the Kennedy-Kassebaum Health Insurance Portability and Accountability Act (HIPAA), such as the cap on the number of accounts sold and the limits on larger employer group participation.

ACTION #2: Create an economical market for family-owned plans
Severe regulatory burdens on today's health insurance market make it difficult for families to exercise choice in a competitive health care marketplace. Consumer choice models like the Federal Employees Health Benefits Program (FEHBP) allow enrollees to choose from among a variety of health plans with minimal regulation or governmental interference. To apply this principle to the private sector, proposals should:

Allow employers, providers, insurers, and consumer groups to band together in voluntary purchasing cooperatives called "HealthMarts." Small employers could enjoy the benefits of pooling risk and escaping onerous coverage mandates, while their employees could take advantage of the choices and affordability that competing health plans offer. This proposal could be improved by allowing individual purchasers to buy into a HealthMart.
Allow associations to pool their members' resources to purchase health coverage, with federal protection from state regulation granted in the Employment Retirement Income Security Act (ERISA).

ACTION #3: Enhance health plan accountability
Once a family picks a health plan, the terms of that plan, like those of any other contract, should be enforceable under the law. There should be appropriate recourse for individuals who believe they have been harmed by decisions made by their health plan, or whose plan simply failed to deliver promised benefits. But it is important to understand that such legal recourse is a complement to effective choice and ownership, not a substitute for it. To promote plan accountability without expanding malpractice liability, policymakers can require plans that are covered under ERISA to diffuse patient concerns by:

Disclosing in the health plan contract whether providers must clear specialist referrals or diagnostic test recommendations with plan administrators. If they must do so, plans should be required to disclose in the contract the methodology used by administrators in deciding whether to approve or deny benefit coverage.
Notifying a patient up front, before treatment, whether a specific benefit is covered.
Disclosing the reasoning behind determinations to deny coverage for specific benefits.
Allowing meaningful external review of claims denials by independent medical doctors.

If a health plan continues to deny coverage after an external review deems the treatment necessary, it seems fair to allow the patient to take the case to federal court to receive some form of limited damages. Such measures would provide the right incentives for health plans that may not be acting in good faith to be more accountable to the patients they serve.

These are just the first steps on the road to effective health care reform, but they represent meaningful changes that can make coverage more affordable and consumer choice and health plan accountability more meaningful. They also offer Congress an opportunity to turn the tide of regulation and government mandates that now dominates efforts to improve the health care system. More critically, they offer families what they really want: control and ownership of their health coverage.