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Sen. Rockefeller's Very Good Idea

jdrbio.jpgMost of the attention will focus on the public plan outlined in Sen. Jay Rockefeller's Consumer Health Choices Act. Think of it as the "strong" version of the public plan: For the first few years at least, it can use Medicare payment rates.

But it's not the most interesting part of his proposal, nor the part most likely to make it into law. That honor goes to America’s Health Insurance Trust, Rockefeller's proposal for an independent agency that would gather data, conduct consumer satisfaction surveys, and release comprehensive and easily understandable ratings of the health insurance options -- both public and private -- offered in the insurance exchanges.

Quick story: As you may know, I just began at The Washington Post. That meant I had to set up my benefits package. There were two options: Kaiser Permanente's HMO, and Aetna's modified version of a PPO. I'm not sure if I've said so, but I like to think I know a little something about health insurance. But you know what? I knew nothing about those health insurance plans.

I know Kaiser is good in California, but their DC-area network looked thickest in Maryland, and I don't want to be traipsing out to Maryland for care. But a friend who'd had Kaiser assured me that he'd had few problems. Aetna, by contrast, offered more convenient options but was pricier. I called my benefits manager. She assured me both were pretty good. I pored over the literature. There were few obvious differences.

There are two relevant policy points. One is that even a large employer like The Washington Post offered only two options. That should be fixed in the Health Insurance Exchanges, where in theory many insurers will compete for taxpayer business. Second is that even with a mere two options, I didn't have a trusted source with comprehensive information on their relative quality.

That's what Rockefeller's agency would attempt to fix. The trust would be a nonprofit corporation staffed by experts chosen by the well-respected Government Accountability Office. The trust would conduct surveys, pore over claims data, and rate plans on administrative expenditures, affordability, adequacy of coverage, consumer claims processing (including timeliness), consumer complaint systems, grievance and appeals processes, transparency and customer satisfaction. The ratings would be as simple as possible, with letter grades. All the information would be available online, on the same sites where people would choose their insurer.

It is, in other words, a good and obvious idea responding to a real need in the marketplace. I'd guess that it'll be overshadowed by the public plan portion of Rockefeller's bill. But whatever happens with the public plan, both parties should be able to agree on the inclusion of something like this consumer-oriented trust. The health insurance market will never work unless people have access to the information and choices that would allow them to identify and reward high-performing companies.

(Photo credit: Jay Rockefeller's Senate homepage.)

By Ezra Klein  |  June 11, 2009; 7:22 AM ET
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In that the Washington Post offers only one HMO and one PPO to employees is an interesting detail - you work for a large corporation that has clearly made the decision to limit health care options. What does WaPo's HR think of the spiraling costs of health care? Would love the CFO's take on this expense.

How much does your health care cost each year - and a two part answer would be great: A) how much do you personally pay - and B) how much does WaPo pay for your health care? That could illustrate the divide between actual costs and consumer knowledge.

One thing you may want to address at some point - the tax on health benefits will most likely take away the power of the group - which traditionally has been the ONLY power consumers have had when dealing with health insurance companies.

(I'm one of the six percent of Americans who hang out on my own for health care coverage - the options are exceptionally limited and excessively costly, FYI! And if anyone in my family develops a pre-existing condition, we'll be priced out of insurance.)

What would be the incentive for corporations to provide health care if they don't get this trillion dollar tax credit any more? Would consumers be out looking for individual coverage if the corporate tax credit is abolished?

Posted by: anne3 | June 11, 2009 7:53 AM | Report abuse

No Anne3, the idea is that you take away the corporate tax as one means to fund a public insurance plan in which anyone could enroll. You would be able to ditch you private insurance, which from what you said appears to be pretty precarious, and people in Ezra's situation with only a couple private options through their employer would suddenly have access to both the public plan as well as all the private plans which would be competing for his money.

Posted by: MosBen | June 11, 2009 8:12 AM | Report abuse

I confess that I really don't understand this concept of the "corporate tax benefit" that comes from health insurance. Health insurance is a benefit purchased for employees, therefore it is a legitimate corporate expense, just like salary, or dental insurance, paying for training, or a 401k. It is INDIVIDUALS who are getting a tax break on this benefit, as it is untaxed compensation. If congress is intending to say that these benefits paid to employees can not be excluded from the profit of the corporation, but individuals still get a tax break on this benefit. The logical thing would be to make it taxable on the individual's return.

Posted by: staticvars | June 11, 2009 8:43 AM | Report abuse

Unfortunately, information asymmetry is part and parcel of capitalism. By and large, companies don't want informed consumers, they want blissfully ignorant ones. I don't know whether the insurance industry feels threatened enough by the proposed trust to spend resources fighting it, but it's sure not to be a proposal to their liking.

Posted by: demisod | June 11, 2009 9:49 AM | Report abuse

Portal for plan reviews - that will be great. Let it be Web 2.0 portal too...

The question is why do such excellent ideas die in Congress? Lobbyists? Who to blame? Why do our Congress folks not jump on feet to grab such useful ideas and implement those?

Okay - among other things, let us judge this Pelosi-Reid Congress on this criteria: whether they enact 'portal rules' or not. It is sufficiently central feature to reflect deeply on our beloved Congress folks and to judge who is dear to them - their lobbyists or American people.

Posted by: umesh409 | June 11, 2009 9:58 AM | Report abuse

I also found it confusing when I recently started a new job and had to choose among several insurance options. The information on each plan was confusing and mind-boggling, and I ended up just picking the cheapest plan within the insurer that the HR person stated that most people from my employer used.

I disagree with Mr. Klein on the root cause of this confusion though. In my view, the confusion is caused by the fact that most people don't really pick their insurance - they usually just go with whatever their employer offers. At a previous job, I was not given a choice on insurance. They just picked for me, and I was forced to pay $600 a month (technically, $100 from me, $500 from my employer, though economically speaking, it doesn't really matter who pays, since it's part of total compensation). I wasn't happy with this system either.

The only time where I have actually been knowledgable about my insurance occurred when I signed up for gap coverage in between graduate school and employment. I went to, entered in a modest amount of information, and got tons of quotes and independent ratings on quality and what was covered and what wasn't. I don't understand how a government agency could do a better job than a private agency with a competitive mandate to provide clear guidance on the process.

That said, I agree with the consensus view that we need to find a better way to insure people with pre-existing conditions, and older people who are not yet eligible for Medicare. My preference would have been the older Wyden-Bennett bill, but unfortunately this plan appears to be dead. In its wake, I fear that we will see a reaffirmation of the employer-based system, which I still believe is at the root of many of our nation's health care and income inequality problems.

Posted by: Dellis2 | June 11, 2009 10:23 AM | Report abuse

Oh, boy, a government agency that will dispense "letter grades" for insurance companies!

So, will the agency dispense letter grades for different types of persons (single young male vs. middle aged divorcee with 3 kids)? For different fee structures offered via different employers? For different plans offered by the insurer? Etc.? Etc.? Etc.? And provide this granularity for each insurance company in each state?

I didn't think so. It would be what is called a "waste of money."

Posted by: ostap666 | June 11, 2009 12:36 PM | Report abuse

Here's some follow-up questions:

If there is no longer an incentive for employers to provide insurance, because the tax credit is removed, will they continue to provide insurance?

If no, then it sounds like we'll have one large public group option, and then on the private side, tons of individual families looking for insurance without the leverage that comes from being in the large employer group. Not the best option, at least in my experience today.

Or is the thinking that employers will continue to offer health insurance without any fiscal incentives for doing so? Why would they do that?

Posted by: anne3 | June 11, 2009 12:39 PM | Report abuse

Just to complicate the situation further, every term and condition is negotiable between the insurer and a large corporation. So the PPO offered from Aetna insurance by company A is **not** directly comparable to PPO offered from Aetna insurance by company B. The 2 PPOs may have different hospitals, different co-pays, different prescription plans.

Posted by: Suzi-QA | June 11, 2009 1:28 PM | Report abuse

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