The ACP Advocate Blog

by Bob Doherty

Friday, November 8, 2013

Is it “paternalistic” to set minimum standards for health insurance?

Dr. Bob Centor, author of the always provocative and thoughtful DB’s Medical Rants, suggests that the deep divide over the Affordable Care Act is based on “a major philosophic disagreement” over the respective roles of government and of individuals in choosing what is best for them:

“The administration and their supporters believe that government’s job is to protect citizens from their bad choices. They want to decide what the people need and thus impose regulations. The opposition wants the right to make their own decisions about what defines good insurance.”

(Disclosure: Dr. Centor is chair-elect of the ACP Board of Regents, although his blog posts are his own personal opinions, not ACP policy.  I, of course, work for ACP, as its senior staff advocate on public policy.)

He goes on to cite a New York Times editorial supporting the cancellation of substandard policies, and suggests that, “This editorial, and the law in general, take a paternalistic view of health insurance. This is the philosophical position that defines the problem. The response to policy cancellations and marked increased insurance costs is typified (in the New York Times editorial]..This represents the current talking point – bad insurance. But who should determine what defines bad insurance?”

Is it really paternalistic for the government to set minimum standards for health insurance?  Paternalism means that someone—in this case—the government, is second-guessing the choices that I might make for myself and my family, because it believes that it knows better than me.  But is that what is really going on with Obamacare’s minimum standards for health insurance?

Of course, taking bad products off the market does limit my individual choices.  But the real purpose of Obamacare’s essential benefits and consumer protection standards is to regulate practices by the insurance industry that can cause direct and indirect harm, both to insured persons who is stuck with a bad plan, but also to the rest of us.  The regulations are designed to ensure that insurance companies no longer profit by selling insurance on the individual market that is deceptive and often unsafe and harmful.  The regulations are designed to end the insurance industry’s systematic cherry-picking of who they choose to insure, pitting the healthy against the unhealthy.

How is this any different than the government imposing product safety standards in so many other areas, and appropriately so?   Automobiles that don’t meet federal safety standards—seat belts, air bags, and protection from front end collisions—can’t be sold by auto manufacturers.  Sure, there are “grandfathered” used cars available that don’t meet such standards—fewer and fewer of them as time goes by—but cars sold after such federal standards were mandated have to comply.  Is reducing the number of Americans killed because manufacturers sold them unsafe cars—remember Ralph Nader’s Unsafe at Any Speed book, which started the modern consumer protection movement in the United States—motivated by paternalism?  Perhaps in the sense that the federal safety experts understand that drivers will make mistakes.   The federal safety standards, though, make it far less likely that we will pay for our driving mistakes (and the mistakes of other drivers on the road with us) with our lives.

And yes, by requiring that cars have mandatory safety features, the federal government is forcing us to pay more for them—even features we might think we will never need.  I have been fortunate in my almost forty years of driving to have never had a collision with another vehicle, other than being rear-ended twice by another car (both at low speeds when my car was stopped, and neither seat belts or air bags come into play with rear end collisions).  But I am sure glad that because of government regulation all of my cars have seat belts and airbags, because you never know, they might save my life, or my wife’s or children’s lives.  

Is it paternalistic for the government to regulate the safety of our food?    Henry Aaron, a highly respected expert on health care policy, compares Obamacare’s health insurance standards with the federal government setting food safety standards:

“Imagine a new law enacted to promote food purity. As it is being debated, you are told: ‘If you like what you eat, you can keep on eating it.’ The new law takes effect, and one day, you find that the market no longer carries certain foods you have been buying. As it happens, those products included elements found to be bad for your health. The pure food act barred their use. Obamacare is analogous to the pure food law. It bars certain common practices of insurance companies that most people find unacceptable at best, outrageous at worst.”

Or take today’s announcement that the FDA proposes to ban Trans Fats in food because of the evidence that they cause deaths and disability from preventable heart disease.   Is this paternalism?  It does involve the government inserting its judgment into what foods can be sold to us, limiting the choices of what we can eat.  (Although I suppose we could “grandfather” our favorite prepared pastries made with Trans Fats by stocking up on them before they are banned.)  Or is this just another case of necessary and appropriate regulation to protect lives?

There certainly are other government policies that come closer to paternalism, because they limit our choices directly, not just what can be sold to us.  Take cigarettes—they can be legally sold to adults, but the government mandates warning labels because, well, they and we know that some of us will choose to inhale carcinogens that might sicken or kills us, and when we do, we impose costs on everyone else.  Or take state laws that require that motorcycle riders wear helmets—a direct mandate on individual riders that requires that they spend money on something they might not want or feel they need, but that will help keep them alive (and keep them from shifting their health care costs to everyone else if they end up hospitalized from an accident).  But most of us, physicians especially, would agree that these mandates are a reasonable exercise of government regulation.

This brings me back to Obamacare’s regulation of health insurance.  The standards prohibit the sale of health insurance policies that can cause great harm because they deceptively leave people exposed to bills that can bankrupt them.  They prohibit insurance companies from turning down or canceling coverage because they get sick.  They prohibit cherry picking, signing up healthy people at a discounted premium at the cost of charging more or denying coverage to the less healthy. They require that insurers cover ten essential health care categories, not exotic or unnecessary things, but the basics--like prescription drugs, hospitalizations, doctor visits and preventive services, not because the government thinks it knows better than me, but because these are the benefits that evidence shows are effective in improving outcomes.  Because if your insurer doesn’t cover them, and you get sick, hospitals and doctors will treat you anyway, but your “uncompensated” care costs will be shifted to the rest of us. And you will probably go bankrupt in the process.

They mandate that the benefits be pegged to “benchmark” plans in each state offered by large employers or to state government employees, ending the benefit discrimination that now exists against people in the individual insurance market.  They end discrimination against women, by requiring all plans to offer maternity coverage, instead of excluding it from coverage (as is often the case now) or requiring women pay more to get it.  (As far as the argument against requiring men to pay for maternity coverage, well, it isn’t as if women get pregnant on their own, as one women physician tweeted to me a couple of days ago.) 

Washington Post columnist Ruth Marcus reminds us that Obamacare is trying to remedy a marketplace for insurance that was doing great harm to patients and society.  She recounts the story of Patrick Tumulty, a late middle age man (and brother of one of her colleagues) with Asperger’s who tried to do the right thing by buying himself coverage on the individual insurance market.

“That is where insurance came in — theoretically” Marcus writes. ‘Unexpected illnesses and accidents happen every day, and the resulting medical bills can be disastrous,’ warned the Web site of Assurant Health, which sold Patrick his policy. Its policy, Assurant promised, “provides the peace of mind and health care access you need at a price you can afford.’ Except it didn’t. Assurant balked at paying Patrick’s claims. In just four weeks, he had racked up more than $14,000 in bills. ‘And that was just to figure out what was wrong with him,” wrote Patrick’s younger sister, now my Post colleague. ‘Actually treating his disease was going to be unimaginably more expensive.”

As I blogged last week, I sympathize with the people whose insurance is getting canceled now because it doesn’t meet the new federal standards.  I agree that the President’s promises that people could keep their insurance plans was misleading, something he apologized for today.  I understand that some of the people who had an affordable plan on the individual insurance market liked it and didn’t want to see it canceled.  A small number of them may have had “good” plans that offered most but not all of the benefits now required by Obamacare—but they were plans offered by insurers who were allowed to pick and choose who they wanted to cover and what benefits they would offer to the exclusion of someone else. And for every one of the “winners”  who came out ahead in the pre-Obamacare individual insurance market, there are many, many more who couldn’t get good insurance at any price, or who found that their insurance didn’t really protect them from bankruptcy when they got sick, like Patrick. 

I don’t think it is an unduly paternalistic to set safety and consumer protection standards on the sale of  products that can have a direct impact on our health and safety—think cars, tobacco, food, motorcycle helmets, and yes, health insurance.  All such regulation limits our individual choices to some degree, but only to the extent that they prohibit manufacturers from selling something to us that is harmful, unsafe, and deceptive, all of which describes the products that typically were available in the individual insurance market, albeit with some exceptions, before Obamacare. The goal isn’t to paternalistically second-guess our own choices, but to ensure that the products we can choose from are safe, effective and do what they promise, health insurance included.  

Today’s questions: Do you think it is paternalistic for the federal government to set consumer protection and benefit standards for all health insurance sold in the United States?  Or necessary and appropriate regulation to end the sale and marketing of health insurance products “ that most people find unacceptable at best, outrageous at worst.”

13 Comments :

Blogger james gaulte said...

Not paternalistic? The major theme of ACA is paternalism.Forcing people to buy insurance is by definition paternalistic . A person's freedom( to not purchase something)is limited allegedly for his own good.ACA can be thought about in terms of the Bootlegger and the Baptist model.The Baptists here were the progressives with their paternalistic drives striving to help people through coercion.The Bootleggers were those who profit from the legislation,the big insurance companies,big hospitals,big pharma.
The controlling leadership of ACP would appear to be part of the Baptist congregation but in my most cynical mood, I wonder if there may be an element of the bootleggers as well.

November 9, 2013 at 7:20 AM  
Blogger rcentor said...

Yes Bob, the law, and more importantly the response to the individuals who had their insurance cancelled represent paternalism. Some paternalism is justified. Here is my post in response.
http://www.medrants.com/archives/7537
What is paternalism?

November 9, 2013 at 7:53 AM  
Blogger ryanjo said...

This is likely just the first fiasco in what may prove to be a long line of technical failures, funding inadequacies and bureaucracy burdens and bungling. Just what you get from the feds with every new project, agency, jet fighter, dam or highway. As was stated many times by commenters to this blog in the past 2 years -- the ACA is all good intentions and all bad implementation. It doesn't help that the Egotist-in-Chief can't listen to his critics when his "legacy" is threatened.

I don't call it paternalism. I'd say narcissism.

November 16, 2013 at 8:08 AM  
Blogger Keeping it real said...

Yes. And it misses several crucial points. Our economy can't afford this. Not now. Not ever.

The problem with the pontifications on both the left and right is that neither side will take on where the real problem resides: A system that has gone from a low single-digit percentage of the economy in terms of its impact to one that is now closing in on one dollar in five.

This has to be stopped and reversed, because it did not happen due to the free market and people's free choice. It occurred through acts of extortion, enabled and made legal through both the actions and inactions of government at both the federal and state levels.

Nobody in these discussions, save myself and a literal handful of others, are talking about breaking up the monopolies and imprisoning those who have and are driving up the ridiculous cost of health care. Such as, for example, the companies suing Maine because it won't prevent its residents from reimporting legitimate (not counterfeit) drugs from outside the United States.

What should happen is that the organizations that filed that suit should be hit immediately with a Racketeering and Sherman Act complaint, naming not only the organization but their officers and directors in their personal capacity.
Further, the CBO says that a family of 4 has a decent shot at seeing $20,000 worth of health expenses annually within the next four years. How many families of four have $20,000 a year to spend on this? Very few -- you can buy a $300,000 house, all-in (including insurance and property taxes) in many parts of the country for that sort of money, which is well above the median price.

We either solve the health monopoly problem -- here and now -- or we watch our economy die.

It's that simple.

November 17, 2013 at 6:38 PM  
Blogger Keeping it real said...

Yes. And it misses several crucial points. Our economy can't afford this. Not now. Not ever.

The problem with the pontifications on both the left and right is that neither side will take on where the real problem resides: A system that has gone from a low single-digit percentage of the economy in terms of its impact to one that is now closing in on one dollar in five.

This has to be stopped and reversed, because it did not happen due to the free market and people's free choice. It occurred through acts of extortion, enabled and made legal through both the actions and inactions of government at both the federal and state levels.

Nobody in these discussions, save myself and a literal handful of others, are talking about breaking up the monopolies and imprisoning those who have and are driving up the ridiculous cost of health care. Such as, for example, the companies suing Maine because it won't prevent its residents from reimporting legitimate (not counterfeit) drugs from outside the United States.

What should happen is that the organizations that filed that suit should be hit immediately with a Racketeering and Sherman Act complaint, naming not only the organization but their officers and directors in their personal capacity.
Further, the CBO says that a family of 4 has a decent shot at seeing $20,000 worth of health expenses annually within the next four years. How many families of four have $20,000 a year to spend on this? Very few -- you can buy a $300,000 house, all-in (including insurance and property taxes) in many parts of the country for that sort of money, which is well above the median price.

We either solve the health monopoly problem -- here and now -- or we watch our economy die.

It's that simple.

November 17, 2013 at 7:36 PM  
Blogger Keeping it real said...

Lol. Scared to post my comments.

November 18, 2013 at 8:18 PM  
Blogger Harrison Robinson said...

Ryanjo, you are kidding right?
Commentators on this blog were criticizing the ACA long before there was any implementation to pick on. They were clearly criticizing the intention.

HLR

November 19, 2013 at 2:06 PM  
Blogger phil said...

The ACA was just a compromise: between doing nothing and complete socialism (i.e. Medicare). Paternalism was just the mechanism that was going to satisfy Karen Ignani and AHIP. So, it's just one step on the continuum: Freedom (do nothing) -> Paternalism (ACA) -> Socialism (Medicare for all). Takes yer choice.

November 19, 2013 at 9:30 PM  
Blogger ryanjo said...

The faulty implementation of the ACA was clear from its birth. At the federal level, the ACA creates as many as 159 new boards, commissions, study and grant-making entities. A large number of these new bureaucratic black holes will be directly complicating my life. Just like the present crop of federal forms I sign and date every day, the new ones will not benefit patient care or stop fraud. I criticized this, and so did others. For stating our objections, we were compared to racists by a commenter in an earlier post.

I think recent events with healthcare.gov reveal early proof that Mr. Obama's administration cannot be trusted with implementing this complex change in the healthcare system, and cannot be trusted to speak the truth. Some of us who see the Presidency as a job and not a symbol already knew that.

November 20, 2013 at 7:38 PM  
Blogger MDinthetrenches said...

It remains hard to believe that our physician organizations such as the ACP supported Health Care Reform that did not include malpractice reform and chiefly offers substandard (Medicaid) insurance to uninsured Americans. ObamaCare cut Medicare funding and will allow insurers to underpay physicians.

November 22, 2013 at 12:02 AM  
Blogger Harrison Robinson said...

My problem with using the implementation of complicated health care reform measures as the reason to oppose it is that there never is a concession during all of the criticism that the current system is also complicated.
Yes, the law creates boards and fees and complex structures for implementation and oversight.
But all of that stuff happens now.
There are basically 5 to 10 health insurance companies in this country. Every one of them has a profit motive. Even the non profits measure success on positive financial outcomes. They are non profit, but not for loss organizations.
Anyway, the committees and structures that are criticized under the ACA exist behind the scenes already.
They are picked by for profit boards.
Their motivation is not the success of physicians, or the health of patients.
It is profit.
Raise premiums, and lower costs.

The ACA is aimed at controlling some of this.
It brings in healthy people who will not use the costs as much but who can unpredicatably be in need of health care.

The model of leaving them out of our system, the young and healthy that is, has clearly failed.

To argue against the ACA means that you should propose something better.
If it is implementation that is your concern, then you should point out how that is not political.
Is there a Republican administration that you think could do it better?
Is it that you think that the federal government cannot implement anything.
There is plenty of proof suggesting that this is not true.
Our military is the best in history. As far as I know that is a federal government program.
Our Medicare program is better administratively than any private health plan.
It is more efficient and much cheaper.
Our social security system is excellent.
Our federal government is perfectly capable of administering large organizations.

So, what exactly is the plan if you oppose the ACA?

Implementation has worked well in states that have not resisted it every step of the way.

It would work better at the federal level if it were not a political football being used for nonsensical reasons by Republican governors and statehouses.

I don't know about racism.
I doubt that.
I don't think that there would be any difference in the opposition if President Clinton had done this.

I think that it is political.
I think that there are some perfectly good political differences to be discussed.
Small government vs larger and more involved government is a debate as old as our Republic, and it is a healthy debate that should continue.

But I think that it is important for the Republicans to start winning national elections if they want to keep a seat at the table.

The South in the Civil War decided to give up a seat at the table, and argue about the dying institution of slavery. While they lost that costly fight they also lost their seat at the table about where the transcontinental railroad would run.
It did not run through the South.
The economic fortunes of the South for the next 100 years were very much changed because of that.

I think that the Republicans are losing their seat at the table because they are chasing after the extreme factions of their party.
They are still keeping people like Donald Trump in the discussion.
Really.

That is embarassing.

HLR

November 25, 2013 at 11:00 AM  
Blogger Keeping it real said...

Real issue.

Median family income ---51k
Health spend - 1/6th of economy
51k x 1/6th -- $8,000

Typical spend of top 2 pct -- $20,000 per family.

If top 1 pct were barred by law from spending more than $8k, would health of bottom really get better? Wouldn't there still be genetic and behavioral causes of unequal health outcomes?

If government took control, could republicans get heart transplants? Or only dems? Tea party transplant applications denied?

My plan would be to bring the free market and get government out of health care.

Wake up. Google the Olkahoma Surgical Center. News flash to the Obots out there. Government adds cost without value.

November 26, 2013 at 8:26 PM  
Blogger Keeping it real said...

All the numbers I'm seeing for Obamacare policies aimed at the young 20-something person are at least double that price and instead of the $1,000 deductible they're $5,000 deductibles in most cases, or five times as much if you actually get sick and need to use the so-called "care."

And don't start this crap about it being a "good deal" to stay on your parent's insurance either. It's not. The same screw job applies there too. It was cheaper for you to buy your own policy all-in and you got better coverage (by far) doing so than to be "covered" under your parent's policy too as theirs is going to be gang*****d just like yours -- if not now, next year when the corporate policies have to comply with Obamacare rules.

Incidentally if you're wondering how bad that's going to be there are estimates that as many as 80 million employees will be thrown off corporate policies. Why? Because they don't cover men for pregnancy among other things. That would be about half of all corporate policies, which would be just about in-line with what I'm expecting to see. That's not a mistake either -- Obama knew damn well at least three years ago that would be the intended outcome of this law and he has lied to you and everyone else about it since.

Never mind that for this exorbitant price they're now "covering" young women for prostate cancer and young men for endometriosis. If you don't understand why that's stupid you failed biology class in 9th grade and should immediately turn into your alleged "diploma.

November 26, 2013 at 8:29 PM  

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Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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