A Worrisome Trend in State Health Care Reform

Instead of working to make good coverage available to all residents, Florida and Georgia are
leading a new wave of state proposals to push the uninsured and
low-income Americans into high deductible and limited benefit health
plans.  Backed by Newt Gingrich's Center for Health Transformation
and playing the tune of John McCain's health care plans, the Florida
and Georgia proposals are signs of what's to come from the Right in
future state and federal health care debates.

Florida - Coverage in Name Only:  With an unfocused eye on the state's 3.8 million uninsured Floridians, lawmakers enacted the Cover Florida Plan (SB 2534)
which, among other things, allows insurers to offer limited benefit
health plans called “Consumer Choice Benefit Insurance Plans”?.
Monthly premiums will be capped at $150, but no subsidies will be made
available to low-income residents.  Coverage will focus on preventive
care, office visits, and prescription drugs, but there are no
requirements that specialist care or lengthy hospitals stays be
covered. Participating insurers will be allowed to limit the number of
services they offer and cap amounts they pay for benefits.  While
insurers won't be allowed to reject applicants based on health status,
they can exclude coverage for pre-existing conditions.  

An analysis by the Center on Budget and Policy Priorities
(CBPP) reports that take-up rates for limited benefits plans are very
low with people recognizing that the plans are not worth their money
and choosing not to sign up.  Florida’s own Health Flex Plans, which
are limited benefit plans authorized by lawmakers in 2002, have had
very limited uptake.  Only 2,280 people are enrolled in these plans, of
which only 5 exist because of low consumer interest.  The Cover Florida
Plan differs in that all residents will be eligible for the limited
benefit plans. 

Georgia - Tax Breaks for Insurers:  Georgia in 2005,
enacted a similar mandate-free and limited benefit plan, the Consumer
Choice Benefits Health Insurance Plan.  This year, lawmakers decided to
take another step in the wrong direction.  Ignoring all the evidence of
the inadequacies associated with high deductible health plans,
lawmakers enacted HB 977 which will spend at least $146 million in taxpayer dollars subsidizing high deductible health plans and health savings accounts.  The CBPP reports
that the plan will exempt high deductible plans from premium taxes and
offer tax credits for businesses and individuals that take up high
deductible plans.  From 2009 to 2013, 67% of the state and local tax
breaks given out totaling $223 million will go to insurers, according
to the CBPP.

A major proponent of the Georgia plan was Newt Gingrich’s Center
for Health Transformation (CHT), which said the law will make high
deductible plans more affordable and lead to more individuals and small
businesses to purchase them.  The CBPP analysis
of the bill’s fiscal note shows that the number of high deductible
plans would only increase by 65,000, far fewer than the 500,000
reported by CHT, which used faulty logic and 12 year old data to make
its lofty projections.  And, most of the 65,000 will have moved from
other insurance, because the meager tax breaks ”“ 6% of the cost of
coverage for individuals and 5% for employers - are too little to help
the majority of low-income uninsured Georgians.

What's Wrong with the Right's Approach?  As with
John McCain's health care reform proposals, the Florida and Georgia
plans are indicative of the Right's allegiance to "consumer-driven
health care" - the idea that Americans will use less care if they must
pay more out-of-pocket.  As the New York Times reports,
Sen. McCain wants Americans to purchase their insurance in the volatile
and costly individual market, eschewing the stronger bargaining power
and better consumer protections found in employer-based and large group
coverage.  The problem with this approach is that high out of pocket
costs - which are the result of high deductible and limited benefit
plans - lead consumers to avoid necessary care, resulting in worse
outcomes and higher system-wide costs in the long run. 

As the CBPP reports, even modest levels of cost-sharing lead people to forgo necessary care.  Furthermore, the Florida and Georgia plans are unlikely to reduce the number of uninsured and will lead those who use them to be under-insured.