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May 24, 2000
Dear Senator/Representative:
We urge you, as a member of the Conference Committee on the
Bipartisan Consensus Managed Care Improvement Act of 1999 (Bipartisan
Bill), to enact strong managed care consumer protections without
including the so-called "access" provisions that were in H.R.
2990.
We understand that there is a strong interest in making health
coverage more affordable and more accessible to consumers, and we
share this goal. Indeed, expanding access to affordable health
coverage has been one of Consumers Union's highest priorities for
over 60 years. However, for the reasons outlined below, we believe
that the provisions presently under consideration will in fact move
the health care system further from the goal of affordable and
accessible health care coverage.
We urge you not to include expansion of medical savings accounts
(MSAs) in the bill. Numerous analyses raise concerns about the
impact that MSAs will have on the health care marketplace. Before the
introduction of MSAs, healthy and sick alike are pooled together in
traditional, low-deductible coverage, keeping premiums relatively low
for those with high risks. MSAs appeal disproportionately to the
healthy (who are not concerned about high deductibles because they
don't expect to have high health care expenditures). When the healthy
switch to MSAs, leaving the broader pool of insured individuals, the
premiums increase for all those (on average sicker) people left
behind in traditional coverage. These higher premiums charged for
traditional coverage leads to a new round of switching to MSAs by
those in the traditional, low-deductible plans who are relatively
healthy. Research projects that this cycle will continue until
traditional coverage is no longer affordable for anyone, and is
crowded out of the marketplace. Ironically, this proposed new high
deductible coverage (with MSAs) offered to consumers could ultimately
lead to the end of the choice of traditional low-deductible
coverage.
The expansion of MSAs in H.R. 2990 make this outcome - an end of
traditional coverage - a real possibility because the bill does not
call for risk adjustment (i.e., a surcharge on MSA policies to
reflect the selection of lower risks). One reason it is likely that
MSAs will attract relatively healthy low-risk individuals is that
there is no assurance that MSAs will even be available to sicker
high-risk individuals, since there is no requirement to spread risks
(i.e., community-rating or guarantee-issue). In addition, MSAs are
likely to become a new tax shelter for the wealthy who can afford to
pay high deductibles out-of-pocket and will be lured by the ability
to shield income from taxation.
We urge you not to include a provision making individual-paid
health insurance premiums tax deductible. In the absence of market
reforms to protect high-risk individuals, an individual-based tax
preference could separate the healthy from the sick, undermine
employer-based coverage, and reduce the options and affordability of
coverage for high risks. We therefore do not believe that an
individual tax deduction is an efficient or equitable mechanism for
improving access to affordable health care.
In addition, we urge you to exclude HealthMarts and Association
Health Plans from the bill. Both HealthMarts and Association Health
Plans (as in H.R. 2990) would exempt benefits from state benefit
mandates. Since the bill does not include alternative benefit
requirements, HealthMarts and AHP's could result in skimpy benefits.
A family with very limited coverage (e.g., with low lifetime benefits
or a small number of hospital days or physician visits) will not have
the protection it needs against high health insurance costs.
HealthMarts and Association Health Plans have the potential to reduce
the number of uninsured consumers while increasing the number of
underinsured consumers. In addition, as noted by the Congressional
Budget Office, HealthMarts and Association Health Plans are likely to
fragment the risk pool, allowing lower premiums because of their
healthier risks. Lower premiums for the healthy inevitably leads to
higher premiums for the sick. This "access" change comes with a high
burden paid by the highest risks -- consumers with existing health
conditions.
In sum, while we believe there is a critical need to take
aggressive steps to improve access to affordable health care, we feel
that the steps included in H.R. 2990 are misguided. Therefore, we
urge you to move forward on strong managed care consumer protections
without including the "access" provisions that are in H.R. 2990.
These provisions do not achieve the goals of broad spreading of risk
and equitable sharing of costs.
Sincerely,
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Gail Shearer |
Adrienne Hahn |
