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.”
About the Author
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.Follow @BobDohertyACP
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