By Lambert Strether of Corrente
In yesterday’s roundup, we pointed out that the administration has left about 3.7 million Medicaid applicants or beneficiaries under ObamaCare in limbo with paperwork problems. That’s third world stuff. It’s unconscionable. There’s no excuse for it. And it’s all the more a saddening indicator of the general demoralization and crapification of American life that pointing such things out produces ennui or worse, excuse making, instead of burning outrage at the way a government that’s supposed to be of the people, by the people, for the people actually treats its citizens, especially when they are suffering or in need.
That said, I want to look at two emergent and continuing problems with ObamaCare. First, rates that vary randomly by jurisdiction; and second, narrow networks for both doctors and pharmaceutical formularies. (These problems have long been known to NC readers; see here, here, here, and here.)
ObamaCare and Random Rates
That insurance rates would vary wildly by jurisdiction was known before launch:
Consumers [sic] shopping in the new health insurance marketplaces will face a bewildering array of competing plans in some counties and sparse options in other places, with people in some areas of the country having to pay much more for the identical level of coverage than consumers elsewhere.
A Kaiser Health News analysis of the 1,923 plans being sold on federally run online marketplaces found wide variations of price and availability. For instance, Cigna is offering 50-year-olds one of its midlevel plans for $614 if they live in Flagstaff, Ariz. That same plan, contracting with different hospitals and doctors, will cost $428 in Phoenix and just $395 in Nashville.
Rates in these rural counties are among the highest in the state, according to analysis by the Ann Arbor-based Center for Healthcare Research & Transformation (CHRT), a nonprofit partnership between the University of Michigan and Blue Cross Blue Shield of Michigan.
The least expensive basic plan for a 40-year-old couple with two children costs $761 in Delta County, compared with $462 a month for a comparable plan in Kent County, $560 in Washtenaw County and $566 in Ingham County. While Delta County offered just five insurance plans with one insurer, Kent County had four insurers and 33 plans, Ingham County five insurers and 39 plans and Washtenaw County five insurers and 40 plans.
Again, I think this is unconscionable. Where’s the justice in a citizen who lives on one side of the county line paying more for health insurance — and making life, or even life and death, decisions based on how much they have to pay — and a citizen on the other side paying less? None, that I can see. Well, to be fair, costs — and hence insurance company profit margins — may be different in the two counties. But all that says is that we need a single payer system to introduce a baseline of basic fairness. Social Security benefits don’t vary by the county, so why should health care costs?
ObamaCare and Narrow Networks
Once again, ObamaCare mandates that you walk into a minefield that has no signage or worse, deceptive signage. Whoopsie! For those who came in late, here’s a definition of a narrow network:
Narrow networks are health insurance plans that place limits on the doctors and hospitals available to their subscribers.
They tend to do this in two ways, the first — and most obvious — by simply not paying for trips to doctors that aren’t in their restricted network. The second version, a bit more nuanced, typically has health insurance plans charging higher co-payments to go see a doctor who isn’t in the “top tier.” In this case, you can go out-of-network — but will have to pay a higher price in order to do so.
They do this, of course, to keep costs low (and margins high):
As Americans have begun shopping for health plans on the insurance exchanges, they are discovering that insurers are restricting their choice of doctors and hospitals in order to keep costs low, and that many of the plans exclude top-rated hospitals.
consumer citizen perspective, narrow networks are just the latest scheme by health insurance companies profit by denying you care; their business model has not changed, and how could it? And as a side note, if you’re checking with your insurance company about your coverage over the phone, be sure to record the conversation so you have a record, because — whoopsie! — they’ll flat out lie to you.)
Never mind Obama lying about keeping your doctor and your plan; narrow networks blow that away. What’s in and out of network really matters, because — whoopsie! — you can be on the hook for everything if you go out of network. But as Kevin Drum explains, nobody’s looking out for you but you, and in the nature of the case, you’re stressed, sick or injured, possibly even disoriented, and prone to error. Error that’s profitable for the insurance companies, naturally.
[Narrow networks have] been a growing problem with private insurance plans for years…. [I]t gets worse with Obamacare in some states because of the narrow networks supported by nearly all ACA insurers. For example, [one reader] confirmed to me that he had a Blue Shield plan, but that’s not the whole story. “The blood lab in question is in network for Blue Shield, but not for Blue Shield CoveredCA [whoopsie!] plans, as per everyone I’ve spoken to about it.” …
[I]’s really hard to be alert enough all the time to avoid this. You have to remember to ask every time. You have to ask every doctor, and you have to ask for every lab test. And most doctors don’t know, and don’t really want to be bothered finding out. So you have to be very, very persistent.
And most of us aren’t very, very persistent. Especially if, say, we’re in an ER worried that chest pains [whoopsie!] might be an indication of an oncoming heart attack.
How big a deal is this? I don’t have any way of knowing.
Not only does Drum have no way of knowing, I don’t think ObamaCare itself has any way of knowing; everything is siloed by insurer. They have no reason to make themselves look bad, and there’s no way to aggregate the data for problems like this for ObamaCare as a whole.
But [the reader] is certainly right that it’s the kind of thing that can give Obamacare a bad name if it happens often enough.
And not only “give ObamaCare a bad name,” hilariously the no-doubt-insured Drum’s central concern. No, cost you — whoopsie! — thousands and thousands of dollars!
So, let’s look at narrow networks from two angles: Doctors, and drugs.
A narrow network, by definition, means that there’s a good chance that your doctor won’t be part of your plan. Now, you’d think you could at least check the ObamaCare website to be sure, but of course that’s a #FAIL. In California:
Many consumers have also encountered difficulty finding a doctor who accepts their new coverage, as well as frustration with inaccurate provider lists, according to the California Department of Managed Health Care.
A month into the most sweeping changes to healthcare in half a century, people are having trouble finding doctors at all, getting faulty information on which ones are covered and receiving little help from insurers swamped by new business.
And in Missouri, the insurance companies are getting sued for — I hope you’re sitting down for this — lying about how narrow their networks actually are:
An Overland Park woman is suing Blue Cross and Blue Shield of Kansas City, claiming the company misled consumers about which physicians they could visit through the company’s Affordable Care Act insurance plans.
BCBSKC is one of two companies [Yay! A duopoly!] offering health insurance plans on the ACA exchanges in Kansas.
Debra Simon, in a petition filed in Jackson County District Court, alleges the company marketed its plans as including a specific network of providers. Simon said she checked with Blue Cross to ensure those doctors would be covered prior to purchasing the policy, “and the Blue Cross website indeed displayed the names of the doctors.”
But after she and her family sought care with those providers, she said she was .
“Blue Cross’s practices were at best deceptive and unfair, and at worst constituted a deliberate ‘bait and switch’ aimed at attracting greater amounts of customers and insurance revenues,” the petition said. …
The lawsuit was filed as a class action including any BCBSKC policyholders who purchased a plan with fewer in-network providers than was advertised to them. It includes violations of the Missouri Merchandising Practice Act as well as unjust enrichment.
Heck, the entire health insurance industry is a case of “unjust enrichment,” so far as I’m concerned.
From doctors, we pass on to drugs, or, as we like to call them, formularies. First, the same logic applies with formularies as it does with doctors:
The challenge for consumers is that most of the plans have “closed” formularies where non-formulary drugs aren’t covered. Moreover, the cap on out of pocket spending only applies to costs incurred on drugs included on a plan’s formulary. That means that patients could be saddled with the full cost [whoopsie!] of many of these drugs, with no limits on that spending.
So, already we’re in a minefield where we don’t really know what’s covered, and could be on the hook for a really expensive treatment while thinking we’re covered. Second, the plans are just as transparent about drugs as they are about doctors; that is, they’re completely obfuscated:
Consumers who regularly take medication will need to examine their Obamacare plan options carefully. Even before considering cost-sharing rates, the consumer must confirm that their drugs are covered by the health plan. Uncovered drugs are not subject to any limitations on annual out-of-pocket costs. The Affordable Care Act requires only one drug per category and class be covered within a health plan formulary, though the benchmark plan chosen the consumer’s state can increase that number on a per category/class basis. Depending on the state, the minimum number of drugs to be covered by the prescription drug benefit varies from 485 medications to 1,070 medications. Additionally, a particular drug’s tier assignment to “preferred brand name drug,” “non-preferred brand name drug,” and “specialty drug” is left to the discretion of the health plan. Consequently, a drug that is classified as a “preferred brand name drug” in one plan may be a more expensive “non-preferred brand name drug” in a different plan. All of these factors suggest that consumers should do their homework prior to enrolling in a health plan.
So, again there’s no signage in the minefield. This applies to cancer patients in particular:
A recent analysis by Skopec and Sloan looked at the availability of 14 cancer drugs in 62 Obamacare plans offered in five states and the District of Columbia. They found that coverage for those drugs was “fairly comprehensive across plans.”
“We found, however, that cancer patients would face a difficult, and in some cases impossible, task in making apples-to-apples comparison of health plans based on drug coverage,” Sloan and Skopec wrote.
That’s because, among other things, there is no consistency in how plans provide direct links to their drug formularies. Some plans may even lack a comprehensive list of the covered drugs, and the formularies are not organized in the same way, the analysis found.
“The transparency issue is significant, because a person with cancer needs to be able to know that the drugs that they’re taking are on their formulary,” Sloan said.
While Obamacare plans cover more drugs for more people than in the past, not everything is covered. If drugs aren’t included in a formulary, but you need them, “then you’re on your own” in terms of paying for the medication, said Kaiser’s Pollitz.
Third, and even worse, the insurance companies are gaming the formularies to reject patients with pre-existing conditions. In particular, AIDS patients:
Advocacy groups are accusing four health insurers in Florida of violating federal ObamaCare rules by discriminating against people with HIV and AIDS.
The National Health Law Program and The AIDS Institute have filed a complaint against CoventryOne, Cigna, Humana and Preferred Medical in Florida with the Office of Civil Rights at the Department of Health and Human Services alleging that their ObamaCare plans are overcharging for treatments.
According to the advocacy groups, and cost structure for all silver-level Qualified Health Plans in Florida — one of the options under ObamaCare — for drugs used to treat HIV and AIDS.
“When you put up roadblocks to assessing life saving medications through these high out of pocket costs and prior authorizations people with HIV are more likely to miss doses, experience gaps in treatment and go off treatment altogether,” said Carl Schmid, deputy executive director at The AIDS Institute. “As a result patients can develop drug resistance, become sick and even die.”
Fourth, there’s no reason to think the insurance companies won’t try the same trick for all chronically ill patients:
An ObamaCare Silver policy must pay 70 percent of expected medical costs, while covering 100 percent of “preventive care” (as defined by the federal government). However, the plan is designed for the average patient. So, it is easy for a health plan to design a plan that imposes very high medical maintenance costs on very sick, chronically ill people. High co-payments or co-insurance for prescriptions is one obvious method.
The Avalere study examined 123 formularies from silver-level exchange plans — the benchmark plan that will generally pay 70 percent of covered medical expenses, leaving the consumer responsible for 30 percent – and found that a fifth of them required cost sharing of 40 percent or more for certain classes of specialty drugs used to treat HIV/AIDS, multiple sclerosis, bipolar disorder, cancer and other illnesses. Avalere also concluded that 60 percent of silver plan formularies placed all medications for multiple sclerosis, Crohn’s disease, cancer and other illnesses in the plan’s highest formulary tier. That means patients who need these medicines would face the highest coinsurance percentage.
I seem to recall that one of the big selling points for ObamaCare was that people with pre-existing conditions would be covered. But here we see how the insurance companies are gaming formularies to prevent that. (As with doctors, it’s not clear how data would even be gathered to find out how widespread the problem is; but perhaps patient advocacy groups can help. To be fair, they’re only doing that to AIDs patients, and people with MS, bipolar disorder, or dancer. So there’s that. If only there were a way to keep pharmaceutical costs low by giving the pharmaceutical buyer some leverage!
Again let me issue my ritual disclaimer that of course ObamaCare will help some people; a program of that scale could hardly help doing so. My beef is that ObamaCare does not help all people, equally. It’s not fair that the care you get should vary randomly by jurisdiction, or whether you make it through the random minefield of picking an ObamaCare plan and actually getting care without any whoopsies.
NOTE A pleasant example of Orwellian language:
The directors see low health insurance literacy, particularly among the previously uninsured, as a hurdle. For example, they may not expect their out-of-pocket costs to be as high as they turn out to be, especially under the high cost-sharing design in many Affordable Care Act health plans.
“Health insurance literacy.” Translation: “How and why it’s OK for health insurers to sell you a crapified product.”
“We have an education challenge of what it means to be an informed consumer of an insurance product,” Lee said. “We don’t have many good models out there.”
“Health insurance literacy.” “Education challenge.” “Informed consumer.” “Good models.” You can tell from the smarmy language of faux concern that you’re hearing from a fully paid-up member of the Democratic nomenklatura, and indeed that’s Peter Lee of Covered California. I bet you anything if you let him maunder on, he’d want to have a “conversation” about “innovative” policy. Oh, and you don’t have any good models for being an informed consumer of a defective product for the same reason you don’t have any good models for feeding your tapeworm instead of eliminating it.