Tuesday, September 16, 2008

McCain's Unhealthy Plan, More Inequality... and Good Luck if you've had Breast Cancer

In the journal Health Affairs (pdf), Thomas Buchmueller, Sherry A. Glied, Anne Royalty, and Katherine Swartz carefully dissect the McCain health plan and lay bare the ugly details.

First the bottom line:

"We estimate that twenty million Americans— about one in every eight people with job-based coverage—would lose their current coverage as a result of the change in the tax treatment of coverage. Initially, this loss of job-based coverage would be offset by an increase in coverage in the nongroup market (although not necessarily for the same individuals). Within five years, however, the net effect of the plan is expected to be a net reduction in coverage...The decline of job-based coverage would force millions of Americans into the weakest segment of the private insurance system— the nongroup market—where cost sharing is high and covered services are limited. Senator McCain’s proposal to deregulate this market would mean that people in it would lose protections they now have. These changes would diminish the security of coverage for most Americans, especially those who are not—or someday will not be—in perfect health."
Since many bloggers and journalists have emphasized the likely net effects of the changes in tax treatment on reduced long-term coverage, I thought I'd mention a few things that have received a bit less attention.

One key point that has been overlooked is that the current tax exclusion of employer coverage (that McCain gets rid of) has the added benefit of providing protection to low wage workers:
"...to qualify for the tax subsidy, employers must abide by IRS nondiscrimination rules, which require firms to provide similar benefits to high- and low-wage employees. These rules have the effect of increasing the health insurance coverage of less skilled workers who work in firms that also employ highly skilled workers."
That's all we need...even more inequality in compensation!

Another salient point is that the McCain plan would effectively bypass many state level health protections:
"Currently, the nongroup insurance market is regulated at the state level...Senator McCain’s proposal envisions a relatively unregulated national market for nongroup insurance...

The main effect of establishing a national market would be to undo state laws designed to establish minimum levels of coverage and protect consumers. In a national market where state licenses are not required, insurers will charter in places where regulations are scarce—much like credit card companies do today. ... People in most states would lose access to procedural protections, such as requirements that disputed decisions by managed care plans be subject to external review. People also would lose access to many benefit protections. For example, forty-seven states now require mental health parity, forty-nine states require coverage of breast cancer reconstructive surgery, and twenty-nine require coverage of cervical cancer screening. All of these requirements—as well as regulations in several states that limit the rates that can be charged to higher-cost consumers and that limit who can be excluded from a health plan—would be eliminated under the McCain plan."
So good luck if you get breast cancer and your coverage is based in Ohio, South Dakota or Wyoming --there is no required coverage. If you have a prior history of breast cancer only 7 states will protect you from a denial in coverage. And you better decide quickly what kind of treatment you want. Six states— Alabama, Illinois, Nevada, Oklahoma, Pennsylvania, and Rhode Island— impose time limits on how long a woman has to choose to have reconstructive surgery following a mastectomy (link (pdf)). Yup, you're going to be treated like welfare moms.

Also see this report by CAP on the effects of McCain's plan on women's health.


Pam said...

I'm a breast cancer survivor, and I was hoping you could clarify someting in this post. You say that if McCain's plan is adopted, it will not be required to cover reconstruction after a mastectomy. The Women's Health and Cancer Rights Act does require that reconstruction be covered. I understand that there are some "gray" areas (such as which types of plans are required to cover it), but if you could clarify how states could deny coverage when federal law requires it, I would appreciate it.


lerxst said...

The WHCRA only requires that if a group plan covers mastectomies then it must also cover reconstructive surgery.

The first point would be that if I understand the Health Affairs analysis, the point of the McCain plan would be to shift people into non-group coverage (i.e. people covered outside of their employers). These plans are regulated by the states and may not be covered by the WHCRA.

The second point is that (as far as I can tell) nothing requires any plan to cover mastectomies at all. If they do, then they also have to cover reconstructive surgery.

See this description of the WHCRA at the Department of Labor website:
"Under WHCRA, group health plans, insurance companies and health maintenance organizations (HMOs) offering mastectomy coverage also must provide coverage for certain services relating to the mastectomy in a manner determined in consultation with your attending physician and you. This required coverage includes all stages of reconstruction of the breast on which the mastectomy was performed, surgery and reconstruction of the other breast to produce a symmetrical appearance, prostheses and treatment of physical complications of the mastectomy, including lymphedema."

if you scroll down they also address the issue of non-group plan coverage and how its covered by the states.

lerxst said...

To followup: this website of the Dept of Health and Human Services is pretty clear in saying that WHCRA does not apply to plans that don't cover mastectomies:

"WHCRA does NOT require health plans or issuers to pay for mastectomies. If a group health plan or health insurance issuer chooses to cover mastectomies, then the plan or issuer is generally subject to WHCRA requirements."

They also provide an example of how "state high risk pools" are not subject to WHCRA:

"WHCRA does not apply to State high risk pools since the pool is not an issuer of health insurance. The pool is a means by which individuals obtain health coverage."

lerxst said...

Just to be clear on one point that might be confusing, even if the state you are living in requires that an insurer chartered in that state covers a particular procedure, if you get individual coverage from an insurance company chartered in a different state, you are subject to that other state's rules --which may not require the same coverage.

i.e every insurer providing nongroup coverage will have an incentive to be chartered in say, South Dakota.