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DeParle: GOP plan doesn't 'make sense'

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Health-care reform begins today. At least, some of it does. As of today, health insurers must extend dependent coverage for children up to age 26. They also can't discriminate against children based on preexisting conditions. Coverage can no longer be rescinded except in cases of fraud, and lifetime limits on care are outlawed. But insurers are saying that all this will raise costs, and the GOP renewed its promise to repeal the bill. Earlier this afternoon, I interviewed Nancy-Ann DeParle, director of the White House's Office of Health Policy, to get the administration's perspective on this. An edited transcript follows.

Ezra Klein: What actually changes for people today?

Nancy-Ann DeParle: Kids up to 26 years old get to stay on their parents’ plans. We ban insurance companies from dropping coverage after people get sick. We ban lifetime limits on coverage. Anyone who has had a serious condition or chronic condition or thinks they might ever -- and that's all of us -- should welcome that one.

And then there are the pieces of the patient’s bill of rights. Insurance companies now can’t limit your choice of doctor in the network. Insurers can no longer restrict emergency room care, you can’t get a huge bill because you went to the closest emergency room rather than some other one. Covering preventive care with no cost is a big foundational piece to changing the cost curve. It begins moving insurance from helping when you get sick to helping you stay well.

And what about the plan that Republicans put out today? They said they'd repeal the bill but keep some of its more popular provisions, like the ban on preexisting conditions.

I think they would’ve done better to just say repeal rather than say they’ll replace it with these things that don’t make sense. We’re trying to figure out what they mean when they say they’ll continue to ban preexisting coverage exclusions. Their language there says that insurers can't discriminate against people who had "prior coverage." That's the existing law in COBRA. If it’s that, then it does nothing. But if they mean they’ll ban preexisting conditions without asking everyone to get covered, CBO says that’ll raise costs by 20 percent.

Realistically, Republicans won't be able to repeal the bill. They don't hold the White House and they're not likely to get 60 votes in the Senate. But they've been talking about strategically starving it of funding. Does that worry you?

It poses a lot of danger. If they go to the appropriations committees and say no funds can be used to enforce the ban on preexisting conditions, no money can be given to get healthreform.gov up and running in October, no more seniors getting discounts on their prescription drugs in the donut hole, no trillion dollars in deficit reduction, they can do damage.

Is the White House willing to fight that out to the end with them? The plan's poll numbers aren't great. If the Republicans are threatening to shut down the government, could there be some deal where certain parts don't get funded and others do? Or is the White House determined to stand on this?

Of course. We’d be happy to fight with them about defunding any of this. But I’m not sitting around thinking about defunding this bill. I’m thinking about how we move forward and implement it in a smart and intentional way.

Then on implementation, the insurers are saying look, these new regulations might be great, but since they don't have some of the cost controls that the bill is bringing in later, we're going to have to raise costs or stop offering certain plans. The White House has reacted angrily to this, but why are they wrong?

Well, the law is very clear. Children can’t be discriminated against for preexisting conditions. And the insurers say they will abide by that with family policies, but they say that this niche product they’ve developed, these child-only policies, will be affected. That market is very profitable for them now, They underwrite these kids, check them out, and then decide whether to insure them.

When we were writing this regulation, they came to us and said children need to come in right at the beginning, they can’t just come when they get sick. We checked with the actuaries and said fine, you can have an open enrollment period. And then they said they wanted to underwrite all year. They can’t do that. We don’t restrict them from raising their rates. But they don’t seem to want to do that. So I don’t know what to believe. I'm very cynical on this.

But when you put all this together, it will raise some of their costs, right? I mean, that's why you have things like the individual mandate coming in later. But for now, isn't it likely that we'll see a bump?

At the margins, yes. But a tiny bit. We did a cost analysis. We had actuaries and economists look at it. And at most, all of this together will be up to one or two percent. So yes, some of these benefits do have a slight cost. We also believe things like prevention benefits will save money over the long-term. But that’s why we’re not banning preexisting condition discrimination for everyone right now -- which looks like what the Republican plan purports to do. So yes, there’s a tension, but you can work through, in a deliberate way, which things can be done now and which have to wait for the new markets.

Finally, the bill isn't popular, and it looks to have slipped a bit further in the last month. Why do you think that is?

I don’t look at polls that much but to the extent I have, it looks pretty stable. There’s a certain number of people who’ve never liked it and their intensity has remained about the same. There’ve been people who’ve always loved it and they’ve been stable. And then there are people in he middle, who’ve been pretty stable. But there was a great story yesterday. A lady from Florida was telling the president how her son had had an operation and she had to switch insurers and she was surprised by how low the quote was. So she said to her broker that there has to be a catch. Are they going to refuse to cover everything related to the operation? And her broker said, no, the law says they have to cover your child. And she said she just thought, wow, my government is really helping me. I think people are going to have more of those wow moments going forward.

Photo credit: White House

By Ezra Klein  | September 23, 2010; 2:16 PM ET
Categories:  Health Reform, Interviews  
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Next: Are Republicans afraid of taking on the health-care law?

Comments

I just had one of those "wow" moments. I found out that my insurance premium for next year increased 7% and the deductibles increased 10%. Also, starting next year I can not pay for over the counter medications out of my health savings account. - Thanks Obama

Posted by: cummije5 | September 23, 2010 2:57 PM | Report abuse

--"But if they mean they’ll ban preexisting conditions without asking everyone to get covered, CBO says that’ll raise costs by 20 percent."--

There's the propagandistic lie, isn't it? She (and Klien, by proxy) are conflating two different things. Both are supposedly smart enough not to make such stupid mistakes, so one has to assume that the intent is malevolent.

IF insurers must accept customers irrespective of preexisting conditions, costs are going to rise. People with preexisting conditions are prone to need more health services than those with no health issues.

But DeParle (and Klein) would like people to believe that costs won't rise if we "ask" everyone to have insurance. (The "ask" is precious, isn't it?) What she (and Klein) are really saying is that forcing people who wouldn't otherwise buy insurance to throw their money into the ring will moderate the rise in existing insurance holder's bills. But costs for existing insurance holders will still rise, and costs for all the people forced to buy into the system will really rise, from zero or near zero, to hundreds and hundreds a year, if not more.

The whole undergirding of government health care reform is built of such lies, brought to you by Klein the propagandist.

Posted by: msoja | September 23, 2010 3:01 PM | Report abuse

Dear Ms DeParle and Mr. Klein,

Last week I walked out after 1 hour of a 2 hour benefits administrators meeting put on by Arkansas Blue Cross Blue Shield. The conference was billed as information on new patient benefits, but that entire first hour was devoted to explaining how our employers could AVOID compliance (and associated rate increases) by not making any changes to our policies. If we stayed with our current BCBS policy and did not switch insurers or coverage, we would be considered "grandfathered" and thus not be subject to rate increases. In the words of the Blue Cross Blue Shield speaker, being grandfathered would keep our employers "out of trouble." He went on to detail all of the "triggers" to avoid so we would stay "out of trouble."

Never mentioned: if grandfathered, our employees would NOT be eligible for the benefits of the Affordable Care Act enacted today.

I believe I was the only one of the 50-60 attendees who realized that since the Affordable Care Act was bad for insurers, BCBS would naturally resist it. The others seemed to think that BCBS was doing them a favor.

My company will purposely make a minor change to our Blue Cross benefits package specifically so that we will not be "grandfathered" and be able to extend the benefits of the Affordable Care Act to our employees.

I hope that Ms DeParle and her department will be on the lookout for employees' complaints about their employers' health care policies not covering children to age 26, kids' preexisting conditions, coverage rescinded and the rest -- and be prepared to expose their employers for retaining their "grandfathered" status and withholding the benefits of the Act from their employees.

J.P. Ellen
Fort Smith, AR
jpel@cox.net

Posted by: jgau4 | September 23, 2010 3:06 PM | Report abuse

" Insurance companies now can’t limit your choice of doctor in the network."

What the heck does this mean? If we assume that doctor quality is on some kind of scale, how do we adequately price access to the good doctors so that they aren't overloaded? It seems like more and more practices are using surcharges to do this. It should work more like prescription drug plans where you pay a variable co-pay based on the price of the drug, except here it would be the price of the visit. Flat fees give providers very little incentive to compete on quality and value.

Posted by: staticvars | September 23, 2010 3:09 PM | Report abuse

actually some of these benefits do apply to grandfathered plans. look it up.

Posted by: gonzosnose | September 23, 2010 3:11 PM | Report abuse

msoja: "But DeParle (and Klein) would like people to believe that costs won't rise if we "ask" everyone to have insurance."

Actually, that's more a lie than the quote msoja complained was a lie.

I never heard any honest and informed voice in this debate claim costs won't rise if we ask everyone to have insurance.

Posted by: lauren2010 | September 23, 2010 3:26 PM | Report abuse

Thanks gonzosnose, I will.

Posted by: jgau4 | September 23, 2010 3:27 PM | Report abuse

from healthcare.gov http://www.healthcare.gov/glossary/g/grandfathered_health.html

Grandfathered Health Plan:

As used in connection with the Affordable Care Act: A group health plan that was created—or an individual health insurance policy that was purchased—on before March 23, 2010. Grandfathered plans are exempted from many changes required under the Affordable Care Act. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers. A health plan must disclose in its plan materials whether it considers itself to be a grandfathered plan and must also advise consumers how to contact the U.S. Department of Labor or the U.S. Department of Health and Human Services with questions. (Note: If you are in a group health plan, the date you joined may not reflect the date the plan was created. New employees and new family members may be added to grandfathered group plans after March 23, 2010).

Posted by: jgau4 | September 23, 2010 3:31 PM | Report abuse

The individual mandate will lower costs for current rate payers. Under the existing United States health care system, the uninsured obtain healthcare when necessary by going to emergency rooms. When the uninsured are unable to pay their bills, the hospital suffers a loss which the hospital passes along to insurance companies who pass it along to current rate payers in the form of premiums. Once the individual mandate is put into effect, those costs will be spread among the previously uninsured and no longer borne solely by the current rate payers. The costs should also decrease because the previously uninsured will be able to seek more efficient healthcare service than emergency room visits.

Posted by: QuiteAlarmed | September 23, 2010 4:15 PM | Report abuse

"I never heard any honest and informed voice in this debate claim costs won't rise if we ask everyone to have insurance."

This moron President claimed the bill would result in lower costs for businesses and families.

Now, we have measurably higher premiums for businesses and families.

Posted by: krazen1211 | September 23, 2010 4:15 PM | Report abuse

Oh the amount of misinformation is astounding even for the likes of Nancy.


"Nancy-Ann DeParle: Kids up to 26 years old get to stay on their parents’ plans."

As mentioned only a million this portion of the law is :Effective for Plan or Policy Years Beginning On or After September 23, 2010. Insurers could be early adopters and do it earlier than this and some are already covered under this but many employers are not. Because of this eligibility for this is staggered. In fact the FEHBP isn't even covering employees unitl January 1st 2011. But hey why not promise something you're not delivering. Oh and if they wanted to they could have made it mandatory to be effective immediately.

Posted by: visionbrkr | September 23, 2010 4:16 PM | Report abuse

Oh the amount of misinformation is astounding even for the likes of Nancy.


"Nancy-Ann DeParle: Kids up to 26 years old get to stay on their parents’ plans."

As mentioned only a million this portion of the law is :Effective for Plan or Policy Years Beginning On or After September 23, 2010. Insurers could be early adopters and do it earlier than this and some are already covered under this but many employers are not. Because of this eligibility for this is staggered. In fact the FEHBP isn't even covering employees unitl January 1st 2011. But hey why not promise something you're not delivering. Oh and if they wanted to they could have made it mandatory to be effective immediately.

Posted by: visionbrkr | September 23, 2010 4:16 PM | Report abuse

"I never heard any honest and informed voice in this debate claim costs won't rise if we ask everyone to have insurance."

Lauren,

This is of course true. Any honest and informed person hasn't claimed "claim costs won't rise if we ask everyone to have insurance" - to have made such a claim would have meant said person was either dishonest or uninformed by definition.

As an informed participant who has implied the mandate will prevent costs from rising, we can move Nancy-Ann into the 'dishonest' camp.

What else could possibly be implied by this sentence?

"But if they mean they’ll ban preexisting conditions without asking everyone to get covered, CBO says that’ll raise costs by 20 percent."

If costs will rise whether or not there is a mandate, then the fact that costs will rise without a mandate is irrelevant because costs will also rise with the mandate. It's unneccesary information which happens to make that sentence misleading.

Nancy-Ann wants Ezra's readers to read "if pre-existing conditions are banned without a mandate, costs rise 20%" and conclude "therefore, if we have a mandate we avoid that awful 20% jump in costs". The sentence doesn't make any sense any other way. There is no way she meant for the conclusion to be "therefore, her sentence had no point because covering pre-existing conditions pushes up costs sharply either way."

Msoja is on pretty solid ground here.

Posted by: justin84 | September 23, 2010 4:35 PM | Report abuse

"The costs should also decrease because the previously uninsured will be able to seek more efficient healthcare service than emergency room visits."

QuiteAlarmed,

Bad news here. This didn't happen in Massachusetts.

http://www.boston.com/news/health/articles/2010/07/04/emergency_room_visits_grow_in_mass/

"The number of people visiting hospital emergency rooms has climbed in Massachusetts, despite the enactment of nearly universal health insurance that some hoped would reduce expensive emergency department use."

"“I don’t think the increase has anything to do with health care reform,’’ she said. “It’s much more reflective of [primary care] access problems.’’"

Put another way, health reform didn't help. Maybe didn't hurt. But didn't help. Providing insurance does not conjure up hundreds of thousands of new primary care doctors overnight. Moreover, if the plans are comprehensive enough, why bother waiting for an appointment with a primary care doc when the emergency room is always open and has fancier equipment?

Alas, total claim costs will be going up (as any honest and informed person will tell you, per Lauren). The typical person will pay more for health care (their own and others) than before. A few people on the individual market might pay less, especially those who are subsidized, but since total spending is going up, average spending must be going up too.

Posted by: justin84 | September 23, 2010 4:45 PM | Report abuse

Informative interview. Unfortunately, most Americans wouldn't be able to relate to or understand most of the content.

What Pres. Obama needs is someone to do to the health care debate as what Elizabeth Warren is expected to do to credit card and mortgage agreements - make it simple enough for those at the 9th grade reading level to understand.

In the sad but true category, "...the average adult in this country reads at the 9th grade level."
http://www.msnbc.msn.com/id/39309888/ns/business-consumer_news

The GOP knows this. Democrats obviously don't.

Posted by: tuber | September 23, 2010 4:58 PM | Report abuse

@justin84 and @msoja:

Where in the interview does Ms. DeParle explicitly say that "costs won't rise if we have an individual mandate?" I think you're unfairly putting words in her mouth.

Now if you had attacked her statement that "things like prevention benefits will save money over the long-term," you would have a case. I think she's living a pipe dream if she believes that to be true.

Posted by: moronjim | September 23, 2010 6:05 PM | Report abuse

have to agree with tuber -- "GOP plan doesn't make sense" -- that's why it will gain support.

Posted by: gagkk | September 23, 2010 6:11 PM | Report abuse

"Where in the interview does Ms. DeParle explicitly say that "costs won't rise if we have an individual mandate?" I think you're unfairly putting words in her mouth."

moronjim,

What's the point of saying costs will rise without an individual mandate if costs will also rise with the mandate?

If I tell you that you'll get great gas mileage using BP gas, wouldn't you presume that i'm implying your gas mileage would be better with BP than if you used gas from another company? If I actually meant that you'd get great gas mileage with BP gas, but hey you'd also get great gas mileage with Sunoco gas because you're driving a Ford Fiesta, aren't I misleading you into thinking that BP gas would increase your gas mileage vis-a-vis gas from other stations? The real factor is that you are driving a fuel efficient car.

Likewise, total costs go up either way when pre-existing condition exclusions are banned, but the individual mandate reduces the average premium of those people in the health insurance market. In other words, the individual mandate spreads the costs around a bit more (and inflates them somewhat too).

The only charitable way of looking at this is that she's referring to an insurance death spiral. However, health care costs wouldn't rise here - they'd actually fall. Premiums for those still in the market would go up, but that's something different. Total costs in the system would go down, as fewer people would be insured, and so the average person would be spending less money on health care services. When I hear health care costs, I think of total dollars spent on all things health.

So I'll admit the possibility that she isn't dishonest, but by saying 'costs' rather than 'average premium' her statement is incorrect. If she was referring to the death spiral scenario, it wasn't obvious from the choice of words (as most of the people commenting on it didn't interpret it that way).

"Now if you had attacked her statement that "things like prevention benefits will save money over the long-term," you would have a case. I think she's living a pipe dream if she believes that to be true."

Agreed. My comments were simply to buttress msoja's case that, on the face of it, her claim looked like it was intentionally misleading. Upon further review, it might have been unintentionally misleading, but either way still wrong.

Posted by: justin84 | September 23, 2010 6:40 PM | Report abuse

@justin84:

Most people think of health care costs not as NHE but as premiums (in other words, the price you pay for insurance). But maybe I just live in Bizarro World. ...

"What's the point of saying costs will rise without an individual mandate if costs will also rise with the mandate?"

Most people see a big difference between premiums rising by 5 percent and premiums rising by 20 percent. Then again, back to Bizarro World. ...

And yes, it's hard to believe that she wasn't referring to the insurance death spiral scenario. Most people don't understand what an insurance death spiral is, but they understand average premiums rising at astronomical rates. Which is why Dr. DeParle chose the words she did: she had to explain this to the average person who didn't understand actuarial science.

"If I tell you that you'll get great gas mileage using BP gas, wouldn't you presume that i'm implying your gas mileage would be better with BP than if you used gas from another company?"

No, I wouldn't. I'd presume that you'd get gas mileage that is competitive with BP's competitors for the same vehicle. Now if you replaced the word "superior" instead of "great," I'd feel differently.

Posted by: moronjim | September 23, 2010 7:44 PM | Report abuse

Of course she was talking about the "death spiral." That is the entire reason for the individual mandate, which is what all of this whining is about. Believe it or not, most people in the individual market consider healthcare premiums a "cost."

As for supposedly "real" costs, there is no evidence that mandating insurance increases costs. The fact of the matter is, the US has the highest healthcare costs in the world, and it is the only one that doesn't have universal coverage. If more people are using the emergency room in Massachusetts, it's because they are using it for less major injuries (because they are now insured). That is different than using it as a doctor-of-last-resort. Those minor injuries will be paid for. The hospital will not have to hoist those costs on everyone else. Case in point, I cut my hand a year ago requiring 5 stitches and a tetanus shot. It cost $960.

Also, when talking about the cost of premiums, it's important to remember the subsidies. The average premiums will increase (because the average plan will be of higher quality), but in many cases, the extra cost will be more than offset by the subsidies.

Posted by: cce1976 | September 23, 2010 8:18 PM | Report abuse

Of course she was talking about the "death spiral." That is the entire reason for the individual mandate, which is what all of this whining is about. Believe it or not, most people in the individual market consider healthcare premiums a "cost."

It's "a" cost. Co-pays, deductibles, Medicare premiums and contributions, taxes paid for the subsidies and Medicaid, lost wages - the cost of health care is far more than just the premiums. It does you no good to cheer a decline in premiums only to see the savings and then some siphoned out from these other areas.

"As for supposedly "real" costs, there is no evidence that mandating insurance increases costs. The fact of the matter is, the US has the highest healthcare costs in the world, and it is the only one that doesn't have universal coverage."

There is every evidence that combining cost insulation and leaving patient/provider choice unhindered increases cost. More people with better coverage equals higher prices and utilization, particularly in the American system. The Europeans only do well at cost control because they limit spending by fiat.

Note that the most cost effective health care system isn't any of the European examples, but rather Singapore which has a large consumer directed health element (though other coercive measures too).

"Also, when talking about the cost of premiums, it's important to remember the subsidies. The average premiums will increase (because the average plan will be of higher quality), but in many cases, the extra cost will be more than offset by the subsidies."

A higher quality plan means more cost insulation which means more spending and higher prices. That's Health Econ 101.

If you happen to be getting $10,000 in subsidies, well that sounds swell and maybe your total cost goes down, but someone else is having to pay a higher price for his premiums AND fork over $10,000 against his will so you can have a nicer plan. Costs aren't going down, the subsidized family is just receiving a welfare check they can only spend on health insurance. A family of four headed by a 45 year old making $50,000 gets a $10,860 tax credit and $6,250 worth of cost sharing subsidies. That's the median income in this country. This bill turns the median household into a welfare case. It also creates gigantic implicit marginal taxes, especially around the 400% FPL.

http://healthreform.kff.org/SubsidyCalculator.aspx

"If more people are using the emergency room in Massachusetts, it's because they are using it for less major injuries (because they are now insured)."

Great, so there is now more non-emergency use of the (very expensive) emergency room? More emergency room use overall? By people using other people's money? This is evidence of 'success'? The goal posts used to be at 'ER use will go down'.

Posted by: justin84 | September 23, 2010 9:40 PM | Report abuse

the lord will provide~

Posted by: chicharrone | September 23, 2010 10:00 PM | Report abuse

--Where in the interview does Ms. DeParle explicitly say that "costs won't rise if we have an individual mandate?" I think you're unfairly putting words in her mouth.--

Almost clever, sir. She does say it.

Here's the quote, damning the GOP: "[I]f they mean they’ll ban preexisting conditions without asking everyone to get covered, CBO says that’ll raise costs by 20 percent."

The health care reform act (DeathCare) *already* decrees (in an ostensibly free country) that health insurance businesses cannot discriminate based on preexisting conditions, so DeParle's operative clause, the distinctive argument, is obviously "without asking everyone to get covered" (the OTHER abuse of liberty in this matter, since no one is being asked, they are being told, with obvious permutations of threat.) The difference between the Dems and the GOP, at this moment, is the individual mandate. Therefore, DeParle is blatantly attempting to push the notion that "costs won't rise if we have an individual mandate." And why make the statement DeParle made (and Klein forwarded) otherwise?

And further insult to injury, DeParle (and Klein) are playing games concerning to whom the costs of DeathCare are going to accrue. The CBO is only concerned about costs *to the government* (the amount of government expenditures in excess of the dollars the government is able to steal in the DeathCare endeavor), so when DeParle (and stupid Klein) imply that there *won't* be increased "costs" of "20 percent" if we have the individual mandate, what they are really saying is that *with* the mandate, all the extra money (the real increased costs) beaten out of the citizenry in service to DeathCare will help the government balance its books.

Does that explain it?

Posted by: msoja | September 24, 2010 12:58 AM | Report abuse

In respect to Employer mandates, it appears from www.BenefitsManager.net and www.AHealthInsuranceQuote.com analysis that employers nationwide will be assessed a $2,000 penalty for every employee not offered group health insurance or commonly referred to employer sponsored health insurance. Does this include part time employees that traditionally didn’t qualify or buy health insurance in the first place because of the cost vrs. Hours worked? How in the world is an employer going to absorb this cost? So if an employee doesn’t want to participate in paying their share, the employer is penalized $2,000?

Posted by: mikeoliphant | September 24, 2010 1:17 PM | Report abuse

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