Glitches, Gremlins, and the Affordable Care Act in Nevada

DoctorThere are a couple of ways to read the LVRJ’s write up on the Silver State Health Insurance Exchange.   Republicans will ‘rejoice’ that the glitches in the web portal for the exchange have generated a log jam — as if being happy that people haven’t been able to purchase affordable private health insurance plans is something to be applauded.

Democrats will argue the glitches can be fixed, and may argue the proposed extension of the enrollment period will alleviate some issues for those who can demonstrate they attempted to buy an insurance policy before March 31.  Setting aside the initial technical issues for just a moment  (inadequately staffed call center, and software gremlins) it’s important to remember that these health insurance exchanges aren’t a Big Government operation — they are in the business of selling PRIVATE health insurance for major corporations.

Once more — the Silver State Health Insurance Exchange, and other state exchanges throughout the nation, are facilitating the sale of private insurance to people who do not have health insurance subsidized by their employers, and who do not qualify for Medicare.

“Sign-ups kicked off Oct. 1, but technical issues and an understaffed call center hampered enrollments to well below expectations. About 21,000 Nevadans had bought and paid for coverage as of Saturday.” [LVRJ]

Now back to those technical issues.  In short, the good news is that 21,000 Nevadans now have a health insurance plan, the bad news is that there are people having to wait an inordinate amount of time to get one.   Let’s assume for a minute that capitalism works.  If there is a demand for a product there will be sales.  There is obviously a demand for health insurance plans to cover people who are not getting their coverage subsidized by their employers and who do not qualify for Medicare.  We literally have people waiting in line.  The bottom line is the bottom line — there are more people who want to buy private health insurance policies than the current distribution system can manage.

Note, this is NOT an issue involving whether or not people want to buy policies.  It is NOT an issue involving insurance corporations not wanting to sell their policies.  It is a ‘distribution’ issue.  In basic economic terms ‘distribution’ is how producers get their products to consumers.

Anyone who’s run a small business for at least five minutes knows about distribution, and channel or distribution partners.   Most business advisers will inform their clients that having a distribution partner will (1) help increase sales, (2) assist with physical distribution, and (3) add value to the product by providing services to the end-user. [MMDept]  If we are speaking in this context, then the Silver State Health Insurance Exchange is, in essence,  functioning as a Distribution Partner to the health insurance corporations.  It just isn’t functioning very well at the moment.

The fact that there is a Distribution Partner component to the Affordable Care Act should be a giant flapping  flag to free market advocates that the ACA is NOT a government take over of the health insurance sector.  If individuals were to sign up as they do for Medicare, then the government itself acts as the distributing partner for its own product.  Ah, but that would have been “single payer!”

Political Angles

The possibility that the only real problem with the Affordable Care Act lies in perfectly ‘fixable’ distribution issues may be part of the reason we see Representative Joe Heck (R-NV3) all over the map on the associated political issues:

“Obamacare is not going anywhere,” Heck says. “There are parts I agree with and parts that I don’t agree with. I think we need to start concentrating on fixing the things that are wrong with it, as opposed to passing a budget to get $1.4 trillion in deficit reduction by repealing a law that we know we’re not going to be able to repeal.” So why vote for repeal? “That’s the position I ran on, and I will continue down that path as long as I can,” he says.” [NatlJournal]

And then there was the session with a constituent small business owner  told the Representative last August that the ACA was actually helping his profitability.  Crooks and Liars has the video in which Heck, for all intents and purposes, tosses small business owners under the bus while decrying the problems of employers with more than 50 employees.

Meanwhile Representative Mark Amodei (R-NV2) is still peddling horror stories — as per the instructions of the RNC, etc:

“Prior to the ACA they had affordable coverage they liked, noting that they never had a claim rejected. Now, thanks to the ACA, they pay a higher monthly premium and saw their deductible increase from $400 to $5,000 a year. They are in good health and have rarely spent $5,000 a year on medical care, so essentially their future costs will be out of pocket. They were also notified that their coverage will no longer be offered by the end of 2014. Does this sound like health care reform to you? The ACA has made matters worse,” said Amodei.”

Let me guess. Now why would an insurance company pull a policy after the enacting of the Affordable Care Act? [CNN] There were some very common practices which helped insurance corporations sell policies that were not very customer friendly, let’s look at three general examples:

(1) The Carve Out Policy:  Some corporations offered “comprehensive policies” which were anything but comprehensive, and did not cover a broad range of medical procedures or even offer some essential ones.   These were cheap, but they a policy holder couldn’t be assured they’d cover mammograms, prostate exams, and other basic preventative care.

(2) The Cost Limit Policy:  One classic example of these kinds of policies were the Mini-Meds plans.  Some of these had annual limits of $1,000 per year for out-patient services and $2,000 per year for hospitalization. [CR]  Now, compare this to the average cost for breaking a leg which is about $2,500 or more for a fracture requiring a cast. [HCH]  So, one healthy kid in the family breaks one otherwise fabulous fibula and the insurance runs out for the rest of the family for the entire year.  Cheap but not exactly why people buy insurance. Not even close.

(3) The Fixed Benefit Indemnity Policy:  These plans had an upper limit for medical services, after which the YOYO element kicked in. Once the fixed benefit was set the policy holder paid premiums, some in the $450 per month range for $100 apiece for five trips to a doctor, $50 per year for screening tests, and commonly $30,000 worth of hospitalization at $1,000 per day.  [CR] The average cost per day in a Nevada hospital is about $1,856. [KFF]  Again, these policies might have had cheaper premiums — but that was because they had limited coverage and often coverage well below what would be reasonable in terms of what they paid for.

Little wonder these policies were pulled out of the market. NRS 482.351 forbids me from selling you a motor vehicle using “bait and switch,” or deceptive advertising about the condition of the vehicle or its component parts.  I should also not be allowed to sell ‘defective’ insurance or insurance policies which don’t cover basic and essential services.

Thus our Couple In District 2 is now allegedly paying $416 per month for insurance which must now be comprehensive.  What were average families in the United States paying in health insurance premiums per month in 2011? $414.00. And, the average deductible was $3,879.00. [eIns]  Somehow this doesn’t sound as horrific when put in some context.

And so we have Representative Heck voting to repeal the Affordable Care Act — what is it now 50 times? — just because he said he would, not necessarily because it makes any sense; and, Representative Amodei trying to dig up Scarey Stories of people who bought junk insurance and don’t want to pay for the real thing.

Meanwhile … we have a distribution issue.  We can fix that.

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