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A Friendly Reminder of How Health Insurance Works

Susan  Rinkunas

Susan Rinkunas

Sure seems like the Republicans need one.

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As debate rages on about how to reform the Affordable Care Act, it's becoming clear that there are both regular people and lawmakers who don't understand how health insurance works.

These are the men who don't want to pay for women's health care, the people who don't think they should have to subsidize the cost of others' birth control (especially if they object to it on moral grounds), and, most frighteningly, the supposed "experts" at the top like Seema Verma, President Trump's nominee to run the Centers for Medicare and Medicaid Services, who want Americans to be able to choose which services they pay for, like some kind of dysfunctional insurance buffet.

People are understandably frustrated over high premiums and high deductibles with plans purchased on healthcare.gov, but picking and choosing what you want covered isn't going to solve that. In fact, such "choice" is really code for insurers being able charge you more for all the shit you need, kind of the way nickel-and-diming airlines have started charging for everything they can think of. Let's focus for a minute on why buffet plans are utterly impossible to implement if people want to continue to enjoy the vast perks of the ACA—like being covered for future, unforeseen health problems, and, say, not being discriminated against for having certain conditions or for being a woman.

Verma's idea sounds good at first—how great to be able to customize your own plan based on your particular health needs?—but it simply runs counter to how health insurance operates. The whole point of insurance is that everyone subsidizes everyone else. You pay into a system that covers prostate cancer treatment even if you don't have a prostate, or if you do but you'll never develop that cancer. Your fees help pay for X-rays when a BMX biker breaks their leg, even if the riskiest activity you'll ever do is drive your car. And then if you have a heart attack one day, the cancer survivor and the biker will help cover you, too.

In this way, health insurance is like a gym membership: The people who use the facilities and services the least subsidize the costs of those who use them the most. If everyone who joined the gym went daily, costs for maintaining the space would be prohibitive. Both gyms and insurers would love it if none of their customers came calling at all after signing up, wearing out the treadmills or requiring pricey treatments. But they have little control over that, so they rely on a mixture of heavy and light users signing on. This is known as the risk pool, and it's precisely why the ACA included the individual mandate: In order for everyone, including those with costly pre-existing conditions, to be covered, even the young and healthy among us have to pay into the system.

But Verma—and, by the looks of the leaked draft of the Obamacare repeal bill, some Republicans in Congress—doesn't seem to understand this concept. She apparently wants states to determine what they'll cover, giving them the chance to opt out of the ten essential health benefits—which insurers are currently required to cover under the ACA and include mental health services, maternity care, and preventive care—if they so choose. During her confirmation hearing last month, Verma was asked whether she supports coverage of those ten essential benefits. Instead of replying "no," she said:

"I support Americans being in charge of their healthcare. I support Americans being able to decide what benefit package works best for them. What works for one person might not work for another person and I think it's important that people be able to make the decisions that work best for them and their families."

When Michigan Senator Debbie Stabenow pressed Verma specifically on maternity coverage, and the potential for women paying more for health insurance than men (which was legal and common before Obamacare), she said:

"Obviously I don't want to see women being discriminated against...Some women might want maternity coverage, and some women might not want it, might not choose it, might not feel like they need that. I think it's up to women to make the decision that works best for them and their families."

See what she did there? Instead of admitting that she wants states to be able to choose which services to cover, Verma sold it as giving people the power to choose their benefit package. To be clear, the Republican healthcare plan in the leaked repeal bill would undo that essential benefits requirement, and while Verma is presenting that scenario as resulting in increased choice for you, that's a bald-faced lie. Here's why: If you want coverage for mental health services, maternity care, and preventive care and your state opts out of what you want, it just means insurers can charge you à la carte for them as an "extra" and your plan will be more expensive. Your "choices" will amount to paying for basic coverage, and will be tempered by what you can afford.

If your state drops maternity or mental health coverage and you need either of those things, you'd have to pay the higher cost, go without, or move. And what if you didn't know you were going to need them? Say you're a woman who doesn't intend to have kids, so you buy one of these mythical Verma insurance plans that excludes maternity coverage. Even if you have an IUD or get your tubes tied, you could still get pregnant. What happens then? You would either have to pay out of pocket for astronomically expensive maternity care (the price of pregnancy care and vaginal birth is about $30,000, though insured people pay about a third of that) or you might choose to have an abortion, but Republicans are trying to regulate that procedure into one that exists only in theory, not in practice.

And how about women who do want children—should they be forced to pay extra for their insurance? Of course not. As Michael Hiltzik wrote in the Los Angeles Times, "You're placing the entire financial burden of propagating the species on the shoulders of women roughly 18 to 38." And not at all on men, who have, uh, something to do with the impregnating. Yes, maternity care is expensive, but that's one of the arguments for covering prescription birth control without a copay or deductible: Expanding access to the most effective methods of contraception improves usage, which reduces rates of unintended pregnancies. Unintended births, by the way, cost taxpayers $21 billion in 2010 alone.

Some people really do just want catastrophic coverage for worst-case scenarios like getting hit by a car, but under the ACA, even those plans currently cover the ten essential benefits. If Republicans repeal that requirement, people in some states could be left with such high-deductible plans (the 2017 deductible is $7,150) that they'd end up paying full price out of pocket for super basic things like annual physicals and maintenance medications. Imagine people with diabetes or high cholesterol who can't afford their prescriptions and go on to need limbs amputated, or have strokes. They will cost the system far more than if they'd been able to keep their conditions under control.

Letting states decide how much healthcare to offer is a bad idea. The woman Ted Cruz congratulated on live TV for having multiple sclerosis had to move from Texas to Maryland so she could enroll in Medicaid. That's because Texas chose not to expand the public health insurance program under the ACA and she made too much money to qualify, but not enough money to pay her medical bills. Giving states such options would nix any progress in the fight to ensure that access to healthcare—and your health overall—aren't determined by where you live.

In addition to undoing the essential benefits requirement, the Republican bill would also roll back that Medicaid expansion in the 32 states that opted for it, leaving millions of people without insurance and unable to afford preventive care or manage their chronic conditions. Combined with benefit cuts for healthcare.gov plans, this lack of spending on simple preventive and maintenance stuff risks letting the US population get sick or sicker, in turn causing overall healthcare costs to increase as people need treatment for preventable things or end up in the ER with acute illnesses. Doctors are already raising similar concerns in light of recent immigration raids: They say their undocumented patients are skipping appointments out of fear, the healthcare implications of which we'll be seeing for decades to come. These Republican plans will not "expand choice, increase access, lower cost, and at the same time, provide better healthcare," as Trump promised in his recent address to Congress. In fact, they will do the opposite.

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