Yves here. Obamacare is proving to be a graduate-level course in the study of craponomics. What distinguished good old fashioned mere shoddiness from crapification is that crapification is institutionalized and on its way to becoming systemic. And as this discussion illustrates, one often-used ploy is unnecessary product complexity, so that what Elizabeth Warren called “tricks and traps” can be characterized as consumer neglect and error, meaning they and not the sneaky, misleading vendor are at fault.
We were early to point out that Obamacare would do nothing to eliminate the widespread practice by insurers of canceling coverage when policy-holders submit large claims, meaning when they expect the insurance to act like insurance. The reason was that it continues to allow insurers to cancel policies for fraud, and the definition of fraud is astonishingly broad. As we wrote in January 2010:
Notice that the big concession that the industry supposedly made was its stand on pre-existing conditions. But the bill has a giant loophole: insurers can continue to cancel policies in the case of “fraud or intentional misrepresentation” as they do now. Readers have no doubt hear of or read about how low the permitted bar is now for insurers to rescind policies. And when are insurers most likely to look to find grounds not to pay for treatment? When you most need it, of course, when you have a serious, expensive ailment.
It would be helpful if readers could tell us of their experiences with submitting large claims under Obamacare, since the rescission out looks to be a deliberate point of failure.
By Lambert Strether. Originally published at Corrente
Rescission is the retroactive cancellation of individual health insurance policies when the policy holder makes a claim; before ObamaCare, it was “amazingly common”, and ObamaCare is said to have ended it. We have multiple anecdotes to show that’s not true (and that’s all we have, because our famously free press doesn’t cover the story). The way the insurance companies work the scam is this: When you make a claim, and especially a big one, they go through your forms with a fine tooth comb, and look for the smallest mistake, even an innocent one, and then deny your coverage; could be that you didn’t list a hangnail treatment; could be you got a birthdate wrong; could be you said your eyes are blue when they’re blue-green. Whatever! As I wrote in 2009:
[T]he advocates of the 1000 page public option bill, HR3200, will tell you that rescission won’t happen under HR3200. But that’s not the burden they have to meet. What they have to show is that there’s no way the insurance companies can game their complex, unproven, and Rube Goldberg-esque system to make sure the practice doesn’t continue under another guise — because the health insurance companies are profit-driven (and it’s the fiduciary responsibility of the CEOs to make that profit).
Medicare for All advocates, of course, don’t have to show that. The “Everybody in, nobody out” policy prevents rescission by definition.
Now read this post and tell me the insurance companies aren’t writing their policies to game the system:
A recent article in the New York Times made the point that there is a large ‘learning curve’ to effectively navigate Obamacare coverage. …
The ‘learning curve’ at issue is the ins and outs of Obamacare insurance coverage— premiums, subsidies, co-payments, deductibles and out-of-pocket expenses, along with the intricacies of health care networks where health care providers may deal with hundreds of different insurers and know very little of what is covered by any specific insurance plan. In an effort to minimize costs insurers are creating ‘narrow networks’ that limit who provides covered health care— e.g. specific hospitals, doctors and labs. For example: if (non-emergency) surgery is needed the person having the surgery must make sure that the hospital where the surgery is to take place is ‘in network,’ that all doctors involved in any aspect of the surgery are in network, that all diagnostic tests are done through ‘in network’ labs and that all drugs prescribed are ‘approved’ within the network. Failure to know any and all of these details and to make sure that everyone involved— hospital employees, doctors, nurses and administrators, both understand and act on policy limitations, will result in bills for medical services that the people Obamacare was nominally designed to serve can’t afford to pay. Additionally, if you become sick and lose your income you either go on Medicaid if you live in one of the twenty-six states that expanded Medicaid coverage or you are on your own—no matter how many years you have been paying insurance premiums for.
Here Wall Street and Obamacare start to come together. The issue of the complexification of health care, forcing people to know and to competently navigate every aspect of insurance contracts, medical consultation and health care provision or suffer adverse consequences, is related to Wall Street strategies of issuing mortgages that only those with a Ph.D. in math and a lot of time to waste on contractual minutiae can understand. The variable rate mortgages of the housing boom / bust were sold as ‘affordability products,’ as an accommodation to borrowers for their (the borrower’s) benefit. What they were is age-old predatory lending. The most complicated mortgages were issued to the least sophisticated borrowers. In the case of Obamacare, complexification works in the interests of insurers. The more difficult it is for the insured to know what costs they are ‘responsible’ for the easier it is for insurers to force the costs of health care onto them. And even if one assumes honest motives, forcing people to devote their lives to the minutiae of health insurance policies is a uniquely American form of torture. [See note on neo-liberalism below]
The delusional premise of Obamacare is that making health care less costly will make it affordable. This has been the Republican fantasy behind health insurance ‘vouchers’ for the last three decades— give everyone a three-hundred dollar tax break to buy insurance and everyone will have health care. Obamacare is set up to give the poorest bottom-half of the country a choice between buying food, paying the rent and ‘buying’ health care. This ‘better than nothing’ approach dissuades people from getting health care until they have no other choice. Decades of experience from actual health care systems suggests that health care— keeping people healthy, is socially and economically less costly than treating people once they are sick. The second-order fantasy at work is that individuals can control health care costs by selecting health insurers that in turn select competent low cost health care providers. The amount of information needed to make the informed choice between policies that might actually accomplish this is beyond the ability of everyone likely to be touched by Obamacare. (Quick: what is the probability that an in network anesthesiologist will be available on any given day? Congratulations, you are one ten-thousandth of your way to making a decision).
In other words, the ObamaCare marketplace is a lemon market. By design.
Democrat shill and mainstream economist Paul Krugman argues that California, where Medicaid was expanded under Obamacare, points the way toward a single payer health care system. The first problem with this is that Medicaid is a program of minimal health care provision for the very poor— any effort to conflate Medicaid with the functioning health care systems of other ‘developed’ countries is as pathetic as it is disingenuous. The second problem is that for all of the theorized political feasibility of Obamacare half of the states have refused its most important element— Medicaid expansion, meaning that unless these state governments quickly change their minds Mr. Obama’s ‘pragmatic’ compromise looks a lot like what it is widely perceived to be— a cynical sell-out to the sick-care industry. Speculation that there will be a more propitious time to implement real health care reform— single payer, than when Mr. Obama first took office and Democrats held both houses of Congress, derives from the same failed ‘pragmatics’ that now leaves half of the states without Medicaid expansion. [indeed] The third problem is that unless complexity is resolved people are going to despise Obamacare once they realize that they must devote their lives to insurance company minutiae to get the health care they are now being forced to pay health insurance premiums for. If Mr. Krugman, or any other Democrat Party shill, really wants to sell the idea that ‘Medicaid for all’ is the way forward let them say so clearly so that we know what the Democrat plan really is.
I’ve probably quoted too much, but the takedown is so delicious I just couldn’t stop.
Now, translate “learning curve” into “opportunity for mistakes” and “opportunity for mistakes” into “opportunity for rescission,” and you’ll see what I’m getting at. Eh?
NOTE There is also the issue that ObamaCare is exemplary neo-liberal public policy: Shopping is always good, no matter how long it takes. Naked Capitalism, quoting Corey Robin:
Corey Robin, appalled by the complexity and difficulty of selecting Obamacare policies, made a fundamentally important point about neoliberalism:
Aside from the numbers, what I’m always struck by in these discussions is just how complicated Obamacare is. Even if we accept all the premises of its defenders, the number of steps, details, caveats, and qualifications that are required to defend it, is in itself a massive political problem. As we’re now seeing….
In the neoliberal utopia, all of us are forced to spend an inordinate amount of time keeping track of each and every facet of our economic lives. That, in fact, is the openly declared goal: once we are made more cognizant of our money, where it comes from and where it goes, neoliberals believe we’ll be more responsible in spending and investing it. Of course, rich people have accountants, lawyers, personal assistants, and others to do this for them, so the argument doesn’t apply to them, but that’s another story for another day.
The dream is that we’d all have our gazillion individual accounts—one for retirement, one for sickness, one for unemployment, one for the kids, and so on, each connected to our employment, so that we understand that everything good in life depends upon our boss (and not the government)—and every day we’d check in to see how they’re doing, what needs attending to, what can be better invested elsewhere. It’s as if, in the neoliberal dream, we’re all retirees in Boca, with nothing better to do than to check in with our broker, except of course that we’re not. Indeed, if Republicans (and some Democrats) had their way, we’d never retire at all.
In real (or at least our preferred) life, we do have other, better things to do. We have books to read, children to raise, friends to meet, loved ones to care for, amusements to enjoy, drinks to drink, walks to take, webs to surf, couches to lie on, games to play, movies to see, protests to make, movements to build, marches to march, and more. Most days, we don’t have time to do any of that. We’re working way too many hours for too little pay, and in the remaining few hours (minutes) we have, after the kids are asleep, the dishes are washed, and the laundry is done, we have to haggle with insurance companies about doctor’s bills, deal with school officials needing forms signed, and more…
One more account to keep track of, one more bell to answer. Why would anyone want to live like that? I sure as hell don’t know, but I think that’s the goal of the neoliberals: not just so that we’re more responsible with our money, but also so that we’re more consumed by it: so that we don’t have time for anything else. Especially anything, like politics, that would upset the social order as it is.
I suspect the neoliberals’ beliefs are somewhat different: that markets are so inherently wonderful at solving problems that they can take over a lot of the problems and issues that were formerly fought over in the political arena. And people like shopping, right?
Well, I’m one of those people who hates shopping and regards it as a tax on my time, even in settings where effort has been made to make it pleasurable. .. [W]ho enjoys buying financial products? Even in the best of circumstances, you are making a bet on your future in some way (what do I think the markets will do? How much of this risk should I insure). Unless you have nerves of steel or a crystal ball, it’s hard to suppress the feeling of anxiety that events can play out in a way that will prove your choice to have been a lousy one.
And as we see, “learning curve” = “tax on time,” as well. And for those who can least afford it, who don’t have accountants or personal assistants or grad students; who can’t say “I have people for that.”
UPDATE Here is healthcare.gov on rescission:
The retroactive cancellation of a health insurance policy. Insurance companies will sometimes retroactively cancel your entire policy if you made a mistake on your initial application when you buy an individual market insurance policy. Under the Affordable Care Act, rescission is illegal except in cases of fraud or intentional misrepresentation of material fact as prohibited by the terms of the plan or coverage.
Well, clearly a mistaken birthdate, as in the Amber Smith case with Nevada Healthlink, is a case “of fraud or intentional misrepresentation of material fact.” Right? Because otherwise denying the Smith’s coverage couldn’t have happened. And ha ha, I just noticed: It’s the terms of the plan or coverage that define what “intentional misrepresentation of material fact” actually is. Which nobody has the time to read, even if they could understand what they read. I rest my case.