Gaping hole in the Senate bill would allow insurers to charge thousands more if you're sick

[highplainsdem]

http://seminal.firedoglake.com/diary/22732

By: Jason Rosenbaum Thursday January 7, 2010 11:00 am

The Senate bill has a gaping loophole in it that could negate a central promise of health reform – that insurers can no longer charge more because you are sick.

The loophole comes in the form of an expansion to so-called "workplace wellness programs" that are supposed to reward employees for healthy habits. In practice, however, it could allow insurers to charge thousands of dollars more because, for example, a person is sick or overweight or has high cholesterol.

Here’s how these programs are supposed to work: There is limited evidence that says when employers provide their employees with health programs like building a gym in the workplace and allowing employees to use it before, during, or after work, or hiring a company dietitian to help employees eat better, employee health, moral, and productivity increases. And, their insurance costs go down. So, programs can be devised that offer small monetary rewards for participating in programs like this.

The key here is that the programs should be designed to actually help employees with their health, and the goals set for financial incentives should be able to be accomplished by everyone.

Current law allows employers to vary insurance premiums and deductibles up to 20% based on the health of the employee or their family. That works out to a substantial $965 for individuals and $2,675 for families per year, based on the total cost of coverage. And current law allows employers to set whatever metrics they want – as long as they are "reasonably designed" – for that variation in premiums, and counts something as flimsy as lighting an aromatherapy candle in the office as a "workplace wellness program."

(In fact, aromatherapy is specifically mentioned in the text of the regulations as an example of how easy it is to set up a workplace wellness program.)

So, in practice, employers can purchase a cheaper insurance plan which passes on more costs to their employees, and then lower the price for only those employees who, for example, hit a certain weight target or have low cholesterol. These kinds of targets unfairly burden low-income workers, women, single parents, or people working two jobs, who have less time to work out or eat right. And this practice comes with a double-whammy: Those people, people who need health care the most – are stuck with higher premiums, meaning they avoid the health care they need.

The Senate bill would vastly expand this already large loophole, allowing employers to vary premiums up to 30% (and up to 50%, at the discretion of future secretaries) based on the health of an employee. In effect, employers could make everyone’s health care up to 50% more expensive and only lower health care costs for those meeting the targets, however unreasonable they might be. Instead of being a reward for people with good health, they could become a penalty for everyone else, and a major way to force employees to shoulder more of the cost of health care and employers to carry less.

(For more on the Senate provisions, see this fact sheet from the American Heart Association and this fact sheet from the National Partnership for Women & Families .)

This is not idle speculation. Chuck Stone, Director of North Carolinians for Affordable Health Care with
the State Employees Association of North Carolina/SEIU Local 2008, told reporters today that he saw it happen in North Carolina this year.

-snip-

[IndianaGreen]

1. K&R

Pelosi and Reid are about to deliver a BOHICA to the American people, and without lubrication.

[chimpymustgo]

2. This thing is packed with loopholes and hidden hits on the people. Kill it.

[truedelphi]

5. Hear! Hear.

Why is it so important to have a bill that is 2000 pages and counting?

Where is that transperency President Lip Service offered when he was running for office?

And do not forget, the bill as it is mandates that We the Consumers come up with some one hundred and sixty six billion bucks in penalties, most to be collected in the six years between 2013 and 2019.

Funny thing, the cost of expanding the wars is pegged at one hundred and sixty eight billion. (Congressional vote, Dec 2009)

So don't be too confidant that our penalties will pay for our "Premium" care, though they certainly should!!

[highplainsdem]

8. +1

[villager]

3. What!? Central promises of health care reform being "negated!?" Say it ain't so!

Actually, are there any of those promises left that are being kept? :shrug:

[dgibby]

4. This "health care" reform is making me sick. n/t

[Odin2005]

6. KLL THE BILL

[madrchsod]

7. smoke?-my daughters cost goes up 10%.

this wellness stuff is nothing new. when i was employed my insurance company gave a 10% deduction if i enrolled in wellness program. of course they raised the plan 10% that year.

[Ms. Toad]

9. I'm not getting the major risk with this change

Look at the first specific example on P 4 at this link (linked to in the firedog lake link): http://blog.healthcareforamericanow.org/wp-content/uploads/2010/01/women-wellness-issue-brief.pdf

What possible reason would the employer have to offer this program? The employer is permitted to reward Rob (stand-in for any healthy individual). By rewarding Rob, the employer has to take $2400 more out of its own pocket to pay the $4800 premium for Rob which it still has to pay to the insurance company. There is nothing in the bill I am aware of (or that anyone suggested was part of the bill) that correspondingly reduces the employer's costs.

Although the overall goal is that insurance companies will reduce premiums charged to businesses because the insured workforce is healthier, there is not a direct reduction in the rates related to Rob meeting his goals. Over time, if the wellness promotion works, the company will benefit in reduced (or - in reality - less increased) premiums - but it's not a direct relationship - and if the already healthy individuals get healthier the reduction in premiums (or lower increase) is really not going to be significant enough to cover the cost (the additional employer pick-up of the premium, and the cost of providing the program).

If there is a real issue of people with health problems (or without the time to invest in getting healthy) being charged more, there should be ample data by now to make a supported case. The program, with a 20% reward permitted, has been in place a decade. Nothing I could find at any of the links connected the theoretical risk it identified with data that would support an assertion that the risk has been realized with 20% rewards permitted - and that it would be worse by bumping up the reward limits.

I'm not getting all excited about this particular issue until I see numbers that suggest a real discriminatory risk - or language in the bill that would reasonably motivate an employer (not insurance company) to implement a program of picking up an additional 30% of certain employee's insurance bills without any direct guarantee that the employer would save enough in premiums to pay for the program.

[Celebration]

10. of all the concerns about the health care bill

this is last on the list.

I agree.

[PSPS]

11. Such arrangements are actually contrary to the proper model of health insurance

Health Insurance by its very nature depends on pooled risk and having premiums priced according to the risk of the pool, not the individual. Programs such as this depart from this model and just perpetuate the broken "price by the individual risk" model we have now. We know the result from this broken model -- unaffordable premiums and denied coverage.

While it's beneficial for people to take care of themselves, financially rewarding them individually for such efforts is the wrong way to go. Instead, the concept should be to improve the "wellness" of the entire pool.

[Ms. Toad]

13. I'm not saying it is a smart model

But given that insurance companies, for the most part, will not be allowed to discriminate based on health status once the bill is fully phased in, there is absolutely no motivation for the employer to pick up a larger share of the premium for employees who meet health goals. So what if the employer is permitted to reward a healthy employee with up to 50% of the premium - why would they? The reward is paid directly from the employer's pocket to the insurance company without any direct benefit to the employer, so I expect to see it happening very often (and if it was happening during the 10+ years HIPAA has been in place, I would have expected to see a data based analysis, rather than just theoretical "sky is falling" warnings).

I just don't see that this provision is worth all (or even any) of the wind-em-up way in which it is being described.

[slipslidingaway]

12. From his blog at HCAN ...

I wondered if HCAN was now against the bill.

:shrug:

http://blog.healthcareforamericanow.org/2010/01/07/gaping-hole-in-the-senate-bill-would-allow-insurers-to-charge-thousands-more-if-youre-sick/#comments

"Okay, then will you support efforts to kill the bill?

Barring that hope, I find worker wellness programs a good start. If you're going to eat right and exercise occassionally, then you should pay less than somebody who won't - but in return the ideal should start from when you enter the program, NOT with whatever preexisting conditions you have. Work on them, the cost goes down.

Gosh, this is starting to make sense!

Reply to this comment January 7th, 2010 at 2:33 pm
Jason Rosenbaum says:
What bill? We're trying to make sure it's not in the final bill.

Worker wellness programs, well designed, can indeed be good things. But more study is needed before they're broadly applied, and there is evidence to show that the financial incentives we offer are way to high. For example, Germany gets a lot out of its programs, but their rewards are in the range of $50 per year, not thousands.

Reply to this comment January 7th, 2010 at 2:37 pm"