In early 1963, Bill Cosby made his first appearance on “The Tonight Show.” Those of us who were fortunate enough to see that performance knew that we were seeing something new, fresh and inventive. Later that year, Cosby recorded his first live album, “Bill Cosby is a Very Funny Fellow … Right!” America was captivated by his easygoing narrative style, and the album became an instant classic.
For many Bill Cosby fans, the hallmark of the album is the last three tracks on side one, where Noah engages in a conversation with God about the coming floods and God’s instructions about building an ark and rounding up two of every species. Noah thinks he’s being pranked and asks, “Who is this … really?” A booming voice replies, “It’s The Lord, Noah.” To which Noah offers the one-word, disbelieving answer: “Right!”
While some may see an analogy between the roll out of PPACA and the end-of-the-world scenario of Noah, I find myself thinking more about the opening track on the same album. It’s entitled “A Nut in Every Car.” Mr. Cosby suggests that rather than spend money on Broadway shows and nightclubs, visitors to New York would be just as entertained by riding the subways, because “there’s a nut in every car.” News reports coming out of our nation’s capital just before Christmas make it clear the nuts are still the best entertainment value in town — though this is more tragic than comic.
Essential benefits up to states
It began with a report from the American Medical Association that 4 out of 5 metropolitan areas in the United States lack a real and competitive health care marketplace. Peter Carmel, AMA president, cites new data that “demonstrates the degree of anti-competitive market clout that some health insurers have gained through mergers and acquisitions.” The AMA has come to the conclusion that this may cause “competitive harm to patients, physicians and employers.”
This comes as no surprise to those of us who work in the industry. Practitioners have had a front-row seat to the demise of vibrant and competitive markets, and many of us have suffered its consequences. It is remarkably difficult to differentiate yourself in a market with three offerings. Some markets have fewer. Alabama has the least competitive market, followed by Alaska, Delaware, Michigan and Hawaii. Yet, this did not all begin recently, and it is not solely caused by mergers and acquisitions.
Some of us will remember when these were vibrant markets, brimming with eager carriers and offering a wide choice of plan types, plan features and pricing. During the early 1990s, we watched as many states began to dictate product features and coverage requirements that most buyers did not want, but which were a part of the overall let-them-eat-cake attitude in many legislatures. Other states added coverage mandates that (I am not making this up) surprised the advocates by driving up prices. In the legislative fairyland, you can add features without adding cost, but in the real world, that’s just not possible.
When PPACA was passed, some were heartened and others frightened about the standardization of benefit plans. Yet, in a move that can only be termed “policy by political expediency,” a bulletin has been issued from Health and Human Services that turns the standardization discussion on its head. The Obama administration — sensitive to the resonant argument of political opponents that the federal government will be creating a one-size-fits-all set of essential benefits — has declared that they will instead allow the states to make those decisions.
Timothy Jost, the Willet Family professor of law at Washington and Lee University and a proponent of PPACA, said, “The new bulletin perpetuates uncertainty about what benefits and insurer will be required to cover under the Affordable Care Act.” He told the New York Times that he had instead hoped that the Department of Health and Human Services would have provided more uniformity and less flexibility. The Republicans worry that this new shift will allow the states to impose more mandates, which will increase costs.
More coverage, more cost
Is this starting to sound familiar? It should, because we are now traveling down the same road we’ve traversed, with the expectation that we will somehow magically arrive at a different destination. Of course, this is the federal government at work, so there are some strictures about the how and what of the new state-designed essential benefit plans. States will have to choose a benchmark from one of the following plans: one of the three largest small-group plans in the state; one of the three largest health plans for state employees; one of the three largest national health insurance options for federal employees; or the largest health maintenance organization operating in the state’s commercial insurance market.
One of the whipping posts used by the president to achieve passage of PPACA was that there wasn’t enough diversity in markets. The AMA has confirmed that which we already knew — that most state markets are like a Baskin Robbins with only one, or two, flavors. Customers can have whatever flavor they want, as long as it is one of the two available. Now the administration seeks to counter a political argument being made by their opponents by enabling the very behaviors that (at least in part) brought us to the kind of marketplace they decried during the debate and run up to PPACA’s passage.
While the directive itself offers little in the way of guidance, the law requires some benefits that aren’t usually found in the typical employer plan. Things like coverage for habilitative services for people with cerebral palsy or autism, which was Representative — and DNC chairperson — Debbie Wasserman Shultz’s (D-Fla.) favored mandate when she served in the Florida legislature. The addition of services and more mandates is especially troubling.
The temptation the states may face is using the federal employees’ health benefit plan as their chosen standard. These plans are typically more benefit-rich than plans offered by most employers. Those plans often offer coverage for autism, chiropractic care, infertility drugs and more. Neil Trautwein, employee benefits counsel at the National Retail Federation, worries that the cost of an essential benefit plan drawn on that chassis could end up priced out of the market for an individual purchaser or a small employer.
Those finger-waggers who scolded us about playing politics with the health care of Americans continue to do just that. As in any market, consumers would welcome a diverse set of benefits. Yet, shifting the design responsibility onto states, which have a 20-year propensity for ladling on mandates and then decrying the cost of coverage, is like giving the keys to the New York City subway system to the “nuts on the cars.” Right!
