Rep. Garamendi: State-based Exchanges in the Senate bill could "throw 30 million people to the sharks"
Posted on January 12th, 2010 by Jason Rosenbaum in Congress Watch
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The issue of how the House and Senate health care bills operate their insurance Exchanges has been getting interest today. Jon Cohn explained the differences today in The New Republic, and Igor Volsky at Think Progress had a chart comparing the two plans.
They're right to highlight the differences. As California Congressional Representative John Garamendi told reporters today, "Under health reform, 30 million people will buy their insurance through the Exchanges. I spent years as insurance commissioner in California, chasing after the insurance company scoundrels. You're going to toss 30 million Americans to these sharks unless there is a real strong regulatory environment [like the House's Exchanges] and public option."
As Karen Pollitz, a health policy expert at Georgetown, explained:
Exchanges pull health reform together. They make insurance markets work better, they make them more transparent.
In today's insurance marketplace, anyone can sell anything. Junk insurance is sold alongside good insurance. It's impossible for consumers to tell the difference. Exchanges are more organized and and create a stronger marketplace. Exchanges can be more selective about which products can be sold, and insurance companies have to bid to participate in the House Exchanges, meaning lower prices and better quality.
The Exchanges also provide services to consumers. They make insurance policies clear, understandable, and easy to compare. They're certified by the entity that runs the Exchange, so consumers know the junk has been weeded out.
They also make price comparison meaningful. Today you can't tell if a cheaper insurance policy is cheaper because the company that's offering it is more efficient or simply because the company isn't going to pay your claims.
Therefore, it's crucial that these Exchanges work right, so people will be able to choose high-quality insurance at a decent price.
The House gives the federal government the power to create and regulate a national Exchange. The Senate bill has each state set up its own Exchange. The difference is stark. With a national exchange, you'll have a simple, understandable, and enforceable framework that protects consumers. With state exchanges, you might not.
Why? With state Exchanges, each state would have different rules. Some might to a good job regulating, but some might not have the time, money, or inclination to hold insurance companies accountable. Wendell Potter explained the problems this way:
Insurance companies have long decried what they call the "patchwork" of the state regulatory system, but they've benefited mightily from that patchwork. They've developed cozy relationships with insurance commissioners and their staffs in some states. And they've been able to market insurance plans that shift costs to consumers. For example, one state gave permission for a insurance company to sell a plan that had a $20,000 annual deductible - essentially junk insurance.
Congressman Garamendi followed up:
State governments vary in their ability to enforce regulations, and insurance company influence also varies. You can wind up with a commissioner in a state that has no interest in protecting consumers.
To deal with that, you need a broad based Exchange that's strong enough to overcome the insurance companies. That's the role of the federal government. To make sure the insurance sold is valuable, claims will be paid, and companies will play by the rules.
A national regulatory framework is essential to make sure nobody is getting left at the mercy of insurance companies anymore. And that framework starts with a national Exchange. Under the House bill, the states would be able to take the ball and run their own Exchange after a few years, but the bill ensures strong regulations are present from the start.
By contrast, the Senate bill allows insurers to game the system and prey on states with weak regulators. In short, the insurers prefer the Senate bill because it lets them keep making money by denying care. That's reason enough for Congress to pass the House version of the Exchanges as they work to finish reform right.
UPDATE: Audio for the call is available here [mp3].
We must make sure this useful information is widely shared. Please re-tweet, and speak of this to friends. It's a valuable tool to help understand the differeces between the House and Senate healthcare proposals. With so many lies out there, we need authentic information.
When the the issue of health care reform was first brought up, many agreed that the only industry not totally affected by the recession was the health care industry. I find it ironic and downright irresponsible that the reform has been targeted solely on the health insurance industry and no others within health care. As a matter of fact, I don't see how insurance has anything (in principle) to do with actual health care!
I am a licensed Health Insurance Agent in mutliple states, my wife works for a major pharmecuetical company and both of us are seeing reprocussions from Government Involvement. First of all, with the new ability of the Cobra S policy (passed in 2009) that allows for the possiblity of lower (more affordable) premiums for employees to maintain their group insurance has taken opportunities away from Agents finding lower premiums in the personal market. (Not to say this is a bad thing for the individual other than it is temporary - 18 months.)
As an agent, I have always been frustrated with the inablity to get my clients coverage due to pre-existing conditions. The new bill will help and hurt in this manner. First the government is opting to put in place a health exchange which essentially is the same thing as an Agent's services without the personal touch and expertise that comes from dealing with each individual insurance company as well as representing the insured's personal needs and risk. The pre-exsting conditions that have mostly been denied are obesity, diabetes, and cholesterol - all of which are preventable. Instead of the government's bill keeping the pool fair to all participants and placing restrictions on preventable, pre-existing conditions, it opens up to anyone who wants to wait for a health condition that they can not afford to pay for on their own before seeking out insurance to help cover the costs. That is not a fair prospect considering that insurance is designed to be paid by the many for the few. If everyone waits to get insurance when they need to pay higher claims, there won't be any money left. Imagine waiting to get a $500 automobile policy on a vehicle that you just totaled with a replacement cost of $20,000 - you would be denied… its ludicrous to think health insurance is any different.
The prospect of a health insurance exchange (one location to shop and buy health plans) will essentially ruin my business and that of millions of other agents. How will I afford Health Care for my own family at that point, let alone affording any cost of life? So much for the one industry that has not been "totally" affected by the recession.
The problems don't just stop there and of course are not addressed in any bill. My agency administers group coverage to many doctor's offices and health clinics. My wife and I both are hearing more doctors complaining about losing their ability to practice medicine as the health insurance companies are forcing their hands at using only generics or limiting the lab work and tests that can be done not based on the needs of the patient. With more sick people entering the insurance pool, and less premiums being paid, the money has to come from somewhere and it will - your care!
What about the insurance that protects doctors? Lawsuits are one of the reasons health care is so incredibly high. The last time I heard, it was the practice of medicine and the practice of law, not the mastery or gaurantee of medicine or law. Believe it or not, you can lose a legal case, just the same, you can lose a medical case. So why do we as a nation make it so easy to sue doctors and hospitals? Consumer Protection? No, I don't think so, otherwise we should be able sue our lawyers when they lose our cases.
I am disgusted with the way that our Democratic Party has hastily thrown together a plan that does more hurt than good. Why is it so hard to take care of problems at the root? We did it with cigarette smoking through high taxation on the product as well as Truth Campaigns and higher premiums on health insurance - due to higher risk - why can't we do the same with our nations personal health, health insurance, and health care.
Unfortuneatly, it doesn't seem to matter how much I write to my congressman or the office of the White House. Even though I am a professional in the Industry, I guess I don't know what I am talking about since I haven't been voted or assigned into office (a politician).
BTW, am I the only one that noticed the 9.7% unemployment rate coincides with the 30 million people that the Government said that they wanted to get coverage for (307 million from the census bureau, multiplied by the unemployement rate gives the 30 million people). Last I checked the number of uninsured was closer to 50 million (47 to be exact). It sounds more like a ploy to get our attention away (again) from the real issue.
I wouldn't disagree that there are other players in the system that need to get squeezed a little, but I don't know what squeezing health insurers would be harmful.
The only squeeze of insurance companies that I am seeing within the exchange(even within the above article) is the insurance companies bidding on plan premiums within the exchange (think of one website listing available plans and carriers).
This point will be moot if the bill is passed without legislation to lift the anti-trust exemption. What this means is that the administration from all the major carriers can meet to agree on price points before bidding. Where is the consumer protection in that?
My main point and serious reservation is the fact that the exchange will take away business from agents. I can not stress that enough. To quote what Karen Pollitz said about the exchange:
"The Exchanges also provide services to consumers. They make insurance policies clear, understandable, and easy to compare. They're certified by the entity that runs the Exchange, so consumers know the junk has been weeded out.
They also make price comparison meaningful. Today you can't tell if a cheaper insurance policy is cheaper because the company that's offering it is more efficient or simply because the company isn't going to pay your claims."
This is exactly what licensed insurance brokers do for consumers RIGHT NOW! It is what I do day to day, not including getting to know my customers personally in order to taylor their needs with what is available. No website or exchange can do that. Just ask the disgruntled consumers that use the largest "e health insurance quote" site available today.
I believe there should be stronger regulation on the way business is handled between agents and consumers. For instance, in the State of Florida, Agents (brokers) that are not captive (employed by insurance company) to one carrier legally represent the client - not the insurance company. So by law (regulation) it is in the best interest of the broker to help the consumer buy the best insurance policy available based on risk and within budget.
As a broker, I do not have to push my clients to buy one product from one company. That said, why not place national regulation for Insurance Companies to use only brokers and not have in-house sales agents pushing their limited products on unsuspecting consumers. That alone would create better consumer education and promote insurance carrier competition!
Don't let the government steal jobs! They should be helping to create them (in the private market not the government).