[Hate to make excuses, but this has been a difficult blog entry to prepare, and Part 1 here may seem a little turgid and derivative in looking at an old article in JAMA; and the article’s analysis may be dated in several ways. But Part 2, whenever it’s available, will make this Part 1 make a lot more sense as preparation of the ground. And in any event, amid the cacophony of discussion of Obamacare, no one seems to have all the answers, so take it easy in assessing this entry. (Edited in tiny ways 5/1/12.)]
One argument that has gotten brought up in a wealth of circumstances, and seems to inspire a passionate position, is what I call the “trash in the emergency room” argument. In 1994, when the Clinton plan was being passionately debated and eventually voted down, this sort of argument was brought up—maybe not by politicians, but by grassroots types—among conservatives who were against the Clinton
Some eighteen years later, liberals have dragged out this dead dog of an argument to support why they want to keep the individual mandate in Obamacare. This particular contention is the sort of argument that makes me embarrassed to identify myself as a Democrat. And people will use it to make points with logic or a sense of facts that I wouldn’t have: for instance, a letter writer to the Star-Ledger, the New Jersey daily, on May 28 said that people who refuse to get insurance thereby embody the “I’ve got mine and the hell with everyone else” argument. Actually, if you asked me, the ones who say “I’ve got mine…” are those with employer-given Cadillacs of health plans, who don’t want to hear about those who can’t get insurance, or adhere to some solution that will benefit the system, because they’re just fine with how they milk their own plan for every little sniffle, and slobs without insurance can go scratch….
This is all the rhetorical side of the question of “What to do about the umpty-ump million uninsured?” As with so much else, whether in how I personally prefer to deal with entrenched problems on a “case study” and phenomenological basis, or in how others look at concrete cases journalistically, seeing the challenges to getting everyone insured in concrete instances—and why someone would opt not for group plans—shows just how complicated the situation is, both due to individual circumstances and due to the labyrinthine nature of the “system” that’s involved.
I. Why some of the uninsured remain uninsured: personal observations; and the bugbear of preexisting conditions
First of all, as long as I was uninsured because my family never had insurance after my father died (and indeed before he died, too), you found you could come to live very well without it, when you’re healthy and your health care is usually easy to pay for out of pocket. In fact, you come to see that it’s not wise, when your health allows you to do this, to dump money into paying for insurance, when your monthly (and yearly) expenses if you just paid for care you needed would be much cheaper on average than paying a premium PLUS paying for the occasional treatment that your insurance may not cover. (Similar stories were recounted in a New York Times article of May 28, starting on the front page.)
But as you get older, you feel that it’s wiser to get insurance. Especially when you’ve had a family history of such problems as heart attacks, as my family has had, you think you need insurance at least for such a catastrophic event as having a heart attack and needing the expensive care that prompts.
But then you can encounter problems with getting insurance, because, for instance, when older, you get looked at by an insurance company as a different kind of risk than if you ingenuously started insurance as in the case of some fresh young heart just out of college and starting a new job. Usually the risk you get measured by has been if you have a preexisting condition. And as we have heard many stories of for decades, the way a preexisting condition can get labeled and cited as a reason to deny coverage can be like the flimsiest of cheap-assed pretexts.
The broader issue is that if the Obamacare plan is looking to have private insurance plans take up a lot of the uninsured in this country—rather than the country adopting a “single payer” system for everyone, which seems politically unfeasible—then, regardless of what rules are set up, we are at the mercy of an industry that is about as apt to follow the straight and narrow as a side-winding snake. And what kind of regulatory and consumer-helping system is there in place to deal with an insurance company throwing you like an angry horse?
Before I turn to my colorful anecdote from 1993-94, let’s look at some authoritative discussion of the health-care reforms that New Jersey was enacting by 1993, to understand some of the background—both to my story, and to how people were apt to discuss health-care issues then. A fair amount will seem remarkably reminiscent of some of the issues being addressed today. One key point I will focus on is how much interpreting the constitutional issue of the individual mandate as solving a more systemic problem tends to be gainsaid by the New Jersey situation of almost 20 years ago.
II. New Jersey’s high-level legal situation on health reform in 1993
1. Preface: In 2012, the Commerce Clause and the between-states issue are beside the point regarding the possibility of insurance shenanigans
One of the things that rather astonish me, as I go through recent things written about the Supreme Court review of the individual mandate, and gather my various resources together that I built up years ago regarding health-insurance reform in New Jersey in the 1990s, is how given to broad-stroke formulations, naïve a priori assessments and “solutions,” and un-practical notions the recent debate has been. Granted, the individual-mandate issue is one aspect of a massive bill, and the Supreme Court has to decide on a constitutional—meaning, fairly general—question. But as if this even needs to be argued, and as if a peon like me should have to point it out based on his little postage stamp of complex experience on this, if there is one thing the law tries to address that should be dealt with in its complex and practical-implications reality, it is the U.S. health-care system. To do otherwise would be like, if people were to address what makes an elephant an elephant, instead of talking about large size, wrinkled skin, flat feet, big ears, tusks, long trunk, and so on, people focused only on tusks.
In making the argument I am here, because there are so many aspects to address with the health-care morass, I will try to narrow my argument down to essentials, and hopefully not be as oversimplifying as some people have been in the recent debate.
2. An old farm-subsidy case cited to support health mandate
One of the weirdest things has been to talk about the Commerce Clause in the U.S. Constitution from the standpoint of a 1942 U.S. Supreme Court decision that, according to one op-ed piece, had to do with controlling wheat prices by limiting growing of wheat.
In an op-ed piece in The Star-Ledger (March 26, 2012, p. 4), authors Leslie Meltzer Henry (an assistant professor of law at the Carey School of Law of the University of Maryland) and Maxwell L. Stearns (professor of law at the same law school) say, “The Supreme Court…has relied on the Commerce Clause to strike down state laws that thwart national interests.” Regarding the individual-mandate issue, “Before the ACA [Affordable Care Act, i.e., the Obamacare act], seven states demanded that insurance companies cover high-risk individuals, but without imposing an individual mandate. The results were predictable and frustrating. Absent a meaningful quid pro quo for the additional coverage obligation, insurers pulled out. Leaving the problem of the uninsured to state regulation risked a separating (rather than a pooling) outcome in which high-regulation states drive out insurers but attract high-risk individuals.” The result is, as they say, “Health insurance produces a separation among states…,” and presumably high-risk individuals who are not covered in one state would have to go to another in hopes of getting coverage there. The individual mandate, they seem to imply, would do away with this between-states disparity.
The more I’ve considered this argument—aside from looking at certain empirical issues that are germane to it—the quainter it has looked. It seems like a good example of law professors coming up with a seemingly cogent argument based on a lot of abstractions and not showing a lot of familiarity with the super-complex and irregularity-rich area of the real-world health-care system.
3. New Jersey’s experience with reform in 1993, showing limits within one state
New Jersey voted in health-care reform in late 1992, with the law taking effect at different levels in later 1993 and early 1994. I have an anecdote that gives a very vivid example of what can go wrong when you enact health-care reform that seems to clean up some messes and leaves others untouched (or in some way creates new ones). But let’s look at more general observations, made in no less prestigious a publication than the Journal of the American Medical Association (JAMA) on what happened, or seemed likely to happen, with the 1990s New Jersey reforms.
Joel C. Cantor, Sc.D., writing in the December 22/29, 1993 issue, notes that the New Jersey reform package was passed with a government divided between two parties and political philosophies—a Republican-controlled legislature and a Democratic governor (the opposite of the situation now). The package was also prompted by a court case pursued by unions with respect to the federal ERISA benefits law. “The political reality in New Jersey
A large part of the phenomena Cantor examines and bases his critique on had to do with the undoing of the “DRG”—diagnosis-related group—way of setting prices, which was tied to, among other things, covering uncompensated care. This is an area I always had to work to understand, and anyway I can leave it aside in my discussion here. One of the four consequences of the 1993 reform Cantor discusses—the change in the DRG system being only one—is germane to the 2012 individual-mandate issue: creating new ways to support insurance for those who otherwise might have had trouble getting it. “The third part of the New Jersey compromise, the introduction of the subsidized insurance program, is a good idea with the potential to increase access to care, but it is at high risk of failure” (p. 2969, 3rd col.). The state’s idea to fund the subsidized program was out of the unemployment insurance surplus. Cantor says, “Financing out of the apparent surplus in the unemployment insurance fund may seem painless now, but its future is uncertain. The use of these funds is being challenged by labor unions and could still be deemed inappropriate…” (p. 2969, 3rd col., p. 2970, 1st col.).
Moreover, looking more broadly, “[t]he history of other states’ tax-subsidized plans similar to the reformed New Jersey approach does not leave much room for optimism” (p. 2970, 1st col.). “A number of experiments of such subsidized insurance plans, most of which target small businesses, were recently completed. Many of these projects were not successful because of the realities of state budgets and a lack of political will to continue public subsidies to narrow constituencies. Others did get off the ground successfully as demonstrations. However, these ‘successes’ are sobering. Few states have expanded their demonstration statewide without strict limits on enrollment” (Ibid.).
“Further, none of the state small-business–oriented demonstrations reached more than 17% of previously uninsured businesses in their first 2 years of operation…. Firms enrolling in insurance through demonstrations have higher-than-average revenue per employee, implying that such subsidies are not well targeted to lower-income workers” (Ibid.). The phenomenon seemed to be what has been seen likely to happen with insurance coverage through thick and thin: if it’s left up to employers to provide it via private (non-governmental) insurance companies, those employers with the money and will to do so will provide it. Not everybody gets coverage.
The net result, after Cantor reviews other evidence as well, is: “In short, New Jersey has replaced essentially universal coverage for inpatient care [as the DRG system helped facilitate] with a plan that, even if it survives politically, is likely to provide coverage to a small proportion of the uninsured population” (p. 2970, 1st col.).
If professors Henry and Stearns thought that the big answer of the big issue of the day was to, in important part, prevent high-risk individuals from going from state to state to get coverage, via the holy legal tool of the Commerce Clause, they didn’t calculate what might happen within states when, instead of a federal single-payer insurance system or expanding Medicare, you rely on a host of private insurance and other plans to cover people. Health insurers have long found ways not to cover certain people. You will simply have situations where, within states, certain little pools won’t cover everyone—whether an employer’s group plan or an association’s group plan—and the uninsured person at hand will have to go somewhere else, and probably run into other brick walls. Such a person will become a hot potato, in effect, passed around from one small group to another that doesn’t want to cover him or her.
4. The element of preventing coverage-denial based on preexisting condition
Another of the easy a priori statements that have been made lately for supporting the individual mandate provision in the ACA is that you cannot have a reform like preventing non-coverage of people for preexisting conditions without it. Funny, but this was not the logic—or the factual grounds for a sense of doom for reforms—in New Jersey
Later he comments, “The final piece of the New Jersey compromise is the regulatory reforms, where there is more room for optimism. The new insurance rules are among the strongest enacted by any state. The daunting task faced by individuals and small businesses of finding insurance is now simpler in New Jersey, and private insurers will no longer be permitted to discriminate against those with preexisting conditions” (p. 2970, 1st col.). This, of course, was an assessment based on a generalizing viewpoint. But never does he cite anything reminiscent of Henry and Stearns’ point that “Absent a meaningful quid pro quo for the additional coverage obligation, insurers pulled out.” The point with respect to the ACA is that, at no point did Cantor think it was odd, or unworkable, to institute reforms regarding preexisting conditions without having “universal coverage.”
5. Jersey’s subsidized individual plans ran into trouble
When we look at my anecdote from 1993-94, we will see how ridiculous things could get even as the state erected the details of its new set of reforms. Incidentally, the New Jersey program of outlining a state-defined set of options of individual-insurance plans, with financial subsidies arising out of the unemployment fund, ran aground in about 1997 as the funds for this program dried up. I have sketchy memories of how and when this happened when I was looking into such coverage for myself, but I do know that the method by which you applied, the options offered, and the promise for me in particular as related to my own financial realities never gave me a whole lot of grounds for optimism.
Takeaway: In an elaborate attempt at health-care financing reform in 1993-94, first, no one of relevant authority in New Jersey saw it as necessary to tie reforms regarding coverage of persons with preexisting conditions to some measure requiring “universal coverage.” Second, while the reforms brought a loss of paying for uncompensated care in the hospital area, attempts to increase coverage in other areas, involving (among other things) a novel form of subsidizing individual health care plans, appear to have had weak or mixed results.
Practical question we are left with: In trying to get individual insurance and being denied coverage due to preexisting condition, what remedies, tools, and procedures are there in the health-care system to help us, especially when some overarching “reform” program is being enacted?
Part 2 to come.
