By Ezra Klein
The repeal vote on the floor of the House isn't even close to the most important thing happening to the health-care law right now. For that, you'd need to look across town, to where the Institute of Medicine isdiscussing how the secretary of Health and Human Services should define the term "essential health benefits."
This is the judgment that underlies the whole project. If you're an individual and you have coverage that meets essential health benefits, you don't need to worry about the individual mandate. If you're a mid-sized company and you offer coverage that meets the definition, you're similarly in the clear. But if you don't have coverage that's good enough, you either need to buy it, or upgrade what you've got. Everything the insurers offer in the exchanges has to be as good as or better than whatever counts as essential health benefits. Everything that mid-sized employers offer has to meet the standard, too. The question is, what's the standard?
If you've read Section 1302 of the legislation -- and you have, right? -- it'd be easy to think that benefits had been defined. And they have -- sort of. The legislation mentions nine specific categories of care that have to be included (pediatric, hospital, etc.), and specifies different levels of comprehensiveness (as defined by the percentage of annual health-care costs the policy is expected to cover) that the exchanges will offer. But those elements give shape to the discussion over essential health benefits, they don't conclude it. The same paragraph that ticks off those categories also instructs that "the Secretary shall define the essential health benefits."
The question is how specific you want to go in trying to protect people from insurance products designed to fail them at moment of maximum need and expense. As Sara Rosenbaum, Chair of the Department of Health Policy and Health Services at George Washington University, says, "insurers have all kinds of ways to discriminate against people who have serious health conditions once they're covered by watering down their benefits." The fact that insurers can't turn you away for preexisting conditions doesn't mean they can't design clever plans that make it harder for you to get coverage if you develop a serious condition. "An example is a woman with multiple sclerosis who needs certain therapies to keep her functioning," continues Rosenbaum, "but is told she won’t be covered because she won't 'improve.’ " The legislation doesn't necessarily disallow that now. Should the regulations?
The problem is that as you get more specific with the regulations, you cut off space for innovation in insurance design, make policies pricier, and write more existing insurance products out of compliance. And as Jon Gruber, a health economist at MIT, argued before the panel, Section 1302 "is already a much broader mandate than was ever in place in U.S." Maybe that's enough.
It's a hard question, but I side with the "less-is-more" crowd -- at least for now. Regulations can be toughened and tightened at a later date by either this Secretary of Health and Human Services or one of her successors. But make them too tough or too tight at the start and you'll cause a lot of needless disruption and perhaps disallow some products that would've worked out unexpectedly well. The good thing about giving regulators a lot of power and discretion going forward is that they don't have to use too much of it now.
By Ezra Klein | January 14, 2011; 3:36 PM ET
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