The Junk Insurance Lobby

April 6th, 2017 by Phil Mattera

The ACA repeal-and-replace effort, given up for dead two weeks ago, may or may not be getting resurrected. Whether that happens seems to depend on satisfying the desire of Tea Party Republicans to grant Americans the right to purchase the crappiest health coverage possible.

Whereas Paul Ryan and President Trump initially wanted to retain the ACA’s popular provisions on essential benefits and pre-existing conditions, they now seem open to trading them away to win over the Freedom Caucus.

The position of the hardliners is often dismissed as some kind of bizarre misanthropy, but it is actually the logical conclusion of the mainstream Republican notion that deregulation is the solution to all problems. That notion has been embraced by Trump, who repeatedly bashes agencies such as the EPA and claims that weakening business oversight is the key to job growth.

The members of the Freedom Caucus seem to believe that removing all restrictions on insurance companies will result in lower premium costs. That may be true but only because the insurance that people would be purchasing would cover as little as possible.

While the Freedom Caucus presents this as a bold new approach, it is really nothing more than a return to the situation before the enactment of the ACA. Republicans of all stripes would have us forget how awful and oppressive health insurance used to be.

Thirty years ago, the House Select Committee on Aging was warning that, in addition to the millions of Americans who were uninsured, millions more were underinsured. As traditional insurance was increasingly replaced by health maintenance organizations — whose business model was to deny as much coverage as possible — subscribers had to fight constantly to get prior approval for many procedures and to get reimbursed for medical fees already paid.

Even worse than the HMOs were the individual plans labeled as “limited benefit” or “mini-medical.” Targeted to lower-income people who were self-employed or had jobs that provided no coverage, these policies could cost as little as $40 a month but they had strict limits on both routine expenses and hospitalization costs. These plans existed for a long time on the fringes of the health insurance world, but eventually large companies such as Aetna, Cigna and UnitedHealth Group entered the market with their own bare-bones offerings.

Those subscribing to such plans were gambling they would remain healthy. If instead someone had a serious accident or illness, the plans were useless and often pushed people into personal bankruptcy.

Junk policies are the healthcare analogue to payday loans and other forms of predatory lending. They appear to serve a need and initially appear to be inexpensive, but they can have disastrous consequences.

The ACA was designed to protect people from those consequences, but the Obama Administration did not do enough to explain the change. In a climate of rightwing demagoguery, many people who had to give up their low-cost junk insurance were led to think they were losing something valuable. Moreover, Medicaid expansion, which provided free, decent coverage for low-wage workers who might otherwise have had to depend on junk policies, was blocked in many states for ideological reasons.

Now the Freedom Caucus would have us believe that bare-bones coverage is the way forward for the individual marketplace. That might be the case if we want a society in which those few people with no significant health needs get a bargain while everyone else has to risk financial ruin.

Comments are closed.