U.S. Set to Sponsor Health InsuranceThe Obama administration will soon take on a new role as the sponsor of at least two nationwide health insurance plans to be operated under contract with the federal government and offered to consumers in every state.
These multistate plans were included in President Obama’s health care law as a substitute for a pure government-run health insurance program — the public option sought by many liberal Democrats and reviled by Republicans. Supporters of the national plans say they will increase competition in state health insurance markets, many of which are dominated by a handful of companies.
The national plans will compete directly with other private insurers and may have some significant advantages, including a federal seal of approval. Premiums and benefits for the multistate insurance plans will be negotiated by the United States Office of Personnel Management, the agency that arranges health benefits for federal employees.
Walton J. Francis, the author of a consumer guide to health plans for federal employees, said the personnel agency had been “extraordinarily successful” in managing that program, which has more than 200 health plans, including about 20 offered nationwide. The personnel agency has earned high marks for its ability to secure good terms for federal workers through negotiation rather than heavy-handed regulation of insurers.
John J. O’Brien, the director of health care and insurance at the agency, said the new plans would be offered to individuals and small employers through the insurance exchanges being set up in every state under the 2010 health care law.
No one knows how many people will sign up for the government-sponsored plans. In preparing cost estimates, the Obama administration told insurers to assume that each national plan would have 750,000 people enrolled in the first year.
Under the Affordable Care Act, at least one of the nationwide plans must be offered by a nonprofit entity. Insurance experts see an obvious candidate for that role: the Government Employees Health Association, a nonprofit group that covers more than 900,000 federal employees, retirees and dependents, making it the second-largest plan for federal workers, after the Blue Cross and Blue Shield program.
some states are getting an extension
For hurried states, Obama administration extends health law deadlinesStates are scrambling to make sure they’re ready to meet the health law’s deadlines. Today, they got a slight reprieve: The federal government will allow states additional time to plan health exchanges, the new marketplaces at the heart of the Affordable Care Act.
The Obama administration had initially set a deadline of Nov. 16 for states to decide whether they would run an exchange, or leave the task to the federal exchange. While that deadline still stands, states can now wait until Dec. 14 to turn in “blueprints” that detail how they would get the system up and running.
“We are committed to providing you with the flexibility, resources, and technical assistance necessary to help you achieve successful implementation of your state’s Exchange and look forward to continuing to work with you as we implement the health care law,” Health and Human Services secretary Kathleen Sebelius wrote in a Friday letter to the governors.
States that don’t want to go it alone on the exchange, but would rather partner with the federal government, now have until Feb. 15 to make that decision. For states that decide not to play any role in the process, no notice to the federal government is necessary.
Sebelius wrote the agency had “heard from many states that additional time would allow you to submit a more comprehensive, complete Blueprint application for your Exchange.”
Many states, however, have already made a decision not to play any role in setting up their exchanges: Florida, Kansas and Virginia all announced Thursday that they would leave the task to the federal government.
States have cited their opposition to the health care law as one reason they won’t move forward. Others also see logistical challenges: If they rush to set up the marketplace, it may not have a smooth launch.
Consulting firm Avalere Health expects that one third of the of the states will leave the task of running a health insurance exchange to the federal government.
“It would be very hard at this point to start from scratch,” Mendelson said of states that have waited until the last minute to start planning work. “I’m not going to say it’s impossible, but it would be unlikely.”
I've experienced this firsthand. A few years back, when my doctor suspected I had a kidney stone, he ordered a CT scan at the hospital. On the day I was scheduled to go in, I called in to ask what that was going to cost, since I have a high deductible plan.In the early 1950s, it was nearly impossible to know the value of an automobile. They had prices, yes, but these would differ radically from dealer to dealer, the customer a pawn in the hands of the seller. This all changed in 1958, when US senator Mike Monroney of Oklahoma shepherded a bill through Congress requiring that official pricing information be glued to the window of every new automobile sold in the US. The “Monroney sticker,” as it came to be known, has been with us ever since. It became an effective means of disclosing the manufacturer’s suggested retail price, or MSRP, and a billboard for other data disclosures to the consumer: the car’s fuel economy, its environmental rating, and so on.
The sticker price was one of the triumphs of consumer-rights legislation and has made buying a car an easier—though never altogether easy—experience. What’s more, window stickers made automobile pricing rational and understandable. A customer who knows the base price going in will expect more value coming out. In economic terms, the sticker turned a failed market flummoxed by information asymmetry into something resembling a functioning, price-driven marketplace.
If there is ever an industry in need of a Senator Monroney today, it is health care, in which 1950s-era thinking still rules the day, and irrational and inexplicable pricing is routine. The health care industry plays a gigantic game of Blind Man’s Bluff, keeping patients in the dark while asking them to make life-and-death decisions. The odds that they will make the best choice are negligible and largely depend on chance. Patients need to have data, including costs and their own medical histories, liberated and made freely available for thorough analysis. What health care needs is a window sticker—a transparent, good-faith effort at making prices clear and setting market forces to work.
How bad is it? Uwe Reinhardt, a leading health care economist, described the pricing of hospital services as “chaos behind a veil of secrecy.” Chaos due to lack of predictability; veil of secrecy because many organizations take a proprietary attitude toward data.
Consider a recent study of the costs of routine appendectomies performed throughout California. Though the procedures were largely identical, the charges varied more than 100-fold—from $1,529 at the cheapest to $182,955 at the most expensive...
The health care business is about patients. But the patient population has been largely powerless and remains so even as the members of the medical community—hospital chains, nationwide insurers, large employers—have become much more powerful. Over time, the patient—the raison d’Ítre of the health care business—has been reduced to merely another raw material.
This should not last. What technology can do is change the game—change the basis of competition, change what it takes to win in the health care marketplace. In time, some players will compete better than others by making good use of technology. In this competitive environment, patient use of the available pertinent information, with all its benefits, is going to be critical, giving them more economic power. They will likely demand to know more about their various conditions and what their dollars are being spent on. That’s how American consumers have always operated, and I predict they will here as well.
But what they’ll need is transparency in treatment, cost, and institutions—in other words, a digital sticker. Getting that transparency has to be Job One.
The answer? About $5000. For a single diagnostic scan.