State “Flexibility” and the ACA’s Essential Health Benefits

HHS has been making a big deal about how “flexible” the essential health benefits requires are for states.   Sure, it’s very flexible.  They can choose from column A or column A1.

States would have the flexibility to select an existing health plan to set the “benchmark” for the items and services included in the essential health benefits package.  States would choose one of the following health insurance plans as a benchmark:

  •  One of the three largest small group plans in the state;
  • One of the three largest state employee health plans;
  • One of the three largest federal employee health plan options;
  • The largest HMO plan offered in the state’s commercial market

States can modify coverage within a benefit category, but they have to cover items and services for the following 10 categories of care: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.

So, states have the “flexibility” to craft a benefit package that is based on the existing plans in their state and must include a statutorily mandated list [Section 1302(b)(1) of the ACA] of benefits.   States can tweak the specific benefits in each category but can not reduce the value of coverage.   And God help you if you try, for example, to change a formulary to cover a generic vs. a brand name, or institute step-therapy in that prescription drug category.

As far as the ability to craft a unique policy, that ability just isn’t there.  HHS admits as much in its recently released guidance.

Generally, according to this analysis, products in the small group market, State employee plans, and the Federal Employees Health Benefits Program (FEHBP) Blue Cross Blue Shield (BCBS) Standard Option and Government Employees Health Association (GEHA) plans do not differ significantly in the range of services they cover. They differ mainly in cost-sharing provisions, but cost-sharing is not taken into account in determining EHB. Similarly, these plans and products and the small group issuers surveyed by the IOM appear to generally cover health care services in virtually all of the 10 statutory categories.

The HHS analysis found that the differences among plans are minor.  Some plans cover or don’t cover acupuncture, bariatric surgery, hearing aids, and smoking cessation programs and medications.   So Mississippi can strike a blow for federalism by telling HHS, no, we’re not covering acupuncture.

Where there might be some differences now will be eliminated.  Not every state mandates coverage for behaviorial health treatment.  Now it is number 5 on the “must cover”  list.

Basically, the differences will be on the edges, minor and will address how something will be provided.  For example, pediatric dental plans may be wrapped into a medical benefit.  Or they can be sold as stand-alone plans.   That’s an issue that will be worked out on state-by-state basis.   But I don’t think that makes it more or less “flexible” for states.

States also have varying definitions of the various mandated benefit categories.  What “habilitative services and devices” isn’t necessarily consistent across state lines.  But, in general, it’s for physical therapy (PT), occupational therapy (OT), and speech therapy (ST).  Differences might be who qualifies (meaning what medical condition) and at what level of cost sharing for such benefits.   I don’t consider that flexibility.

Not all states current mandate coverage for the 10 categories (mostly  habilitative services, pediatric oral services, and pediatric vision services) .   While HHS is considering how to best rectify this, the law and HHS are very clear on this point: they will be covered.   How is TBD, but the guidance (linked below) lays out some options and basically tells state to pick an existing plan coverage, for example, the Federal Employees Dental and Vision Insurance Program, and graft it onto their “flexible” state plan.

States do have some flexibility within a benefit category, but only to a point.  States can adjust benefits within a category subject to a baseline set as reflected in the benchmark plan.

Here’s the kicker: Section 1302(b)(4)(G) and (H) direct the Secretary to periodically review and update EHB.  Translation.  Those 10 mandated benefit categories can become 20 if we want them to be.   Also, look for those categories to be more clearly defined through regulatory capture guidance.   Want to make sure a plan covers a specific treatment?   Gather data, hire a good lobbyist and you too can have your benefit become essential.

Full HHS guidance here. [Note:  opens PDF]

And if you missed it, Sebelius was on the Daily Show to talk about the ACA.   Bonus points for work-related Daily Show viewing.   Link at KHN.

[Apologies to Mark for taking so long with this. ]

41 Responses

  1. I saw your hint in the trashed a post section. I do not know what to say. States probably ought to be forced to cover certain things. I’m still ready about the history of health insurance. The saugage that Congress emits is always sad.

    There are a slew of stake-holders in the argument as well.

    I agree with Paul Starr who says that the biggest problem faced is that Americans who have health insurance are happy with what they have and are scared of change. He also states the they do not realize that employer health care does regress wages.

    How’s that for a start?

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  2. NoVa- Awesome post. I have lots of thoughts, but not enough time at the moment. But your paragraph beginning with Here’s the kicker: is spot on. I’ve said this before, but the use of a given health care service is heavily, heavily tied to medicare payment policies. When medicare started covering sleep studies, sleep study centers became ubiquitous. Like you said, if a given service is not on the required list, lobbyists will be hired (*cough* NoVa *cough*), the list will be revised and our debt will grow.

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  3. Now the insurance industry uses those sleep studies to see if you will be reibursed for sleep apnia. I’m borderline.

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  4. How about a selfish response Nova.

    Last year my wife and I paid 22,595 for a policy with $4,000 deductibles across the board. We have no pre-existing conditions other than the worst you can have…our age. Understand what $4,000 deductibles mean. United has paid zero on our needs since we’ve had this policy which has been ten years now. The major benefit we get from United, besides the obvious catastrophic coverage, is their bargaining power. An MRI for my wife cost $1,000 but since United only reimburses at $250 for that procedure (a few years ago) we only were required to pay the$250 obviously a substantial savings. A visit for a sore throat was billed to me at $575 but since United only paid $125 that’s all we were actually charged On the other hand because I felt lightheaded this year on vacation (later self diagnosed as slight vertigo from the plane ride) I went to the Emergency room. They checked my BP which was not really bad..but when I gave my family history..my mother had a stroke at 77..as well as by pass surgery..they decided to give me the fully Monty to make sure their diagnosis was correct. Cat scan of brain..no TIA…EKG..heart fine…Chest Xray..fine…blood work..fine..Doc’s admonition..you’re fine but perhaps it’s time to begin an aspirin regimen, check with you doc when you get home. The out of pocket expense for me…1,275!

    I’m not a supporter of the ACA. I still believe that we’re still just playing around until the eventual reality of single payer finally becomes law.

    There are numerous examples of successful single payers systems. There are no examples of private systems being successful…unless you’re willing to accept lack of coverage for a significant portion of society, outrageous bills for those who are covered, and millions of bankruptcies.

    But Nova you and I have had this discussion before and I realize you respectfully disagree…along with jnc. Free enterprise has encouraged a myriad number of situations that are non productive and very expensive. You have procedure driven medicine…it’s the ultimate conflict of interest for any Doc…should I do a simple stress test to check this guys heart..or a far more expensive and financially rewarding cardiac cath? The hospitals compete to provide the latest and greatest technology, sometimes a good thing, often however leading to incredibly expensive machines that are underutilized.

    The only thing I see good coming out of ACA is for the first time our nation has expressed a desire to see universal coverage. I think it’s getting the proverbial camel’s nose inside the tent.

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    • I was just attempting to point out the the so-called flexibility for states isn’t actually there.

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    • Free enterprise has encouraged a myriad number of situations that are non productive and very expensive.

      And medical procedures, innovations, life-saving drugs, cures for disease, etc., many of which might not have happened absent an expensive and financially rewarding (for some) healthcare system . . . or government funded research. But some good comes with the bad, and if we do get to the point where we stamp the profit motive out of healthcare, innovation may suffer.

      Our 3rd party payer system is a mess, however, so I imagine there will be significant change in the future. Ah, for the days where we paid to go to the doctor ourselves, and purchased insurance for catastrophic care.

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    • “Free enterprise has encouraged a myriad number of situations that are non productive and very expensive.”

      There’s nothing “Free Enterprise” about the current health care system in America. It’s heavily regulated and subsidized.

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      • I do not disagree with that jnc, you are correct. Just as we really don’t have “free enterprise” anywhere in our society, mostly just forms of crony capitalism.

        I simply find it difficult to imagine how “free enterprise” can help because the consumers are not motivated by the same desires that prompt responsible behavior.

        And this problem is very, very complex so I listen to all of you.

        It bothers me that Paula Deen has sold out to big pharma. Nothing personal, she seems like a nice lady, and her personal back story is inspirational. But she is now obviously very wealthy..again I say this not as criticism but to point out lack of need. And so wouldn’t it have been nice if she had used her
        Diabetes to become a spokesperson for National Diabetes organizations instead of selling out to a drug company?

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      • Keep in mind that Novo Nordisk is making the drug that is saving her life. Absent “big pharma” she would have a much shorter and more unpleasant life expectancy.

        I actually think that Paula Deen makes Novo Nordisk look worse with her as their spokesman, not that her involvement with them lowers my opinion of her.

        Novo Nordisk usually uses healthy lifestyle promotion as part of their marketing, and that’s not Paula Deen.

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      • jnc

        Thanks for enlightening me on Novo Nordisk. Perhaps their PR whizzes screwed the pooch on this one. They should have worked with Deen and required her to change her cooking “style” and emphasize healthy lifestyle choices mentioning the drug as only a last resort.

        I’m not sure if you are aware but Deen has an incredible and inspirational back story..a single mom..borderline agoraphobic who conquered all those challenges, starting with sandwiches prepared in her home…she really is amazing.

        She has been blasted for that infamous Today show appearance and so I don’t wish to pile on. I dislike Bubba Clinton as much as many of the conservatives on this site but he has done the right thing in the way he’s handled his heart condition and made himself and example to the public.

        While I certainly defer to Nova on the nuts and bolts of our health care industry..he is the expert…in terms of our overall approach I think we should be emphasizing prevention far more than we do…but I guess that’s like trying to ameliorate our energy problems with conservation. Conserving and living a healthy lifestyle are just not fun things for most Americans.

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      • “I’m not sure if you are aware but Deen has an incredible and inspirational back story..a single mom..borderline agoraphobic who conquered all those challenges, starting with sandwiches prepared in her home…she really is amazing.

        She has been blasted for that infamous Today show appearance and so I don’t wish to pile on. I dislike Bubba Clinton as much as many of the conservatives on this site but he has done the right thing in the way he’s handled his heart condition and made himself and example to the public.”

        No, I didn’t have any idea about her back story or her appearance on Today. My sole concern was that her cooking show wasn’t very diabetic friendly so having her as a spokesperson seemed problematic. She may change it some, but that wasn’t what I read when the announcement was made.

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    • “A visit for a sore throat was billed to me at $575 but since United only paid $125 that’s all we were actually charged”

      CVS minute clinic. http://minuteclinic.com/services/minorillness/sore-throat/
      $90.

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      • CVS minute. Hmmm.

        As we get older other real concerns enter into the picture not found in the young.

        Personal: I wouldn’t worry much, but I have RA and the drugs I take are . . . pretty hard on disease control.

        So, I can see the concerns they are testing out. also, possible civil suits do drive some of these things.

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      • Good point Nova but how many people are comfortable with N.P.’s. Again I have physicians and dentists in my family.
        N.P.’s and Dental Hygienists are terrific and occasionally you might find one who is a better diagnostician than a bad Doc or Dentist…but in my personal experience that is the exception rather than the rule.

        Having said all of that thanks for the info. If I’m in an area with a CVS clinic I’ll consider it the next time. Although again to be perfectly selfish in ten months I go on Medicare and it becomes a moot point.

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      • “Good point Nova but how many people are comfortable with N.P.’s.”

        not to put too fine a point on it, but they’d better get f$$%ing comfortable with it. states are looking at scope of practice expansion for the “affiliated” providers. PA, NP, etc to address the shortage of physicians. people are going to see an NP and be happy about it.

        that’s something i’ve actually been working on for a provider group (can’t say which one — i’m sure you understand)

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      • “f$$%ing ”

        Remember, we don’t have a profanity filter here. If you want to say “fucking”, say “fucking”.

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      • Nova

        “not to put too fine a point on it, but they’d better get f$$%ing comfortable with it.”

        I am in total agreement with this statement. My wife the dentist is glad to be nearing the end of her practice for this very reason. She has been on the front line of the battle for what is termed “access to care”. She has also been on the front lines in the battle over “licensure”. Florida used to have a very tough test including the actual clinical exam. The NERBS…which is a test with reciprocity for many Northeastern states are not nearly as hard. My wife and her peers resent Northern Docs who wish to come to the Sunshine state as snowbirds without passing what was once a rigorous test. A point could be made that the Florida Dental Assn was simply a form of a professional “union” trying to keep competition out of the state.

        But you are correct about seeing N.P’s and in some states Dental Hygienists are now doing fillings. This terrifies my wife because it is really dumbing down her profession. A Dentist goes through 8 years of training and has to perform very well in undergrad just to be accepted to Dental school A Hygienist only needs two years of Juco. We have seen some really dumb folks who have a license to practice hygiene. Something as simple as administering a shot of anesthesia can result in paralysis of parts of the face when done improperly. Hygiene students receive minimal dental anatomy and virtually nothing about the rest of the anatomy. Dentists, at least formerly, even dissect cadavers. Sorry for rambling on.

        I agree with your observation Nova. It doesn’t frighten me because I don’t plan to need a physician for anything serious…and if I do…it’s all a big crap shoot anyway now isn’t it.

        Just know that N.P.’s and Hygienists are a large step down in capability from Docs and Dentists.

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      • that’s the battle, ruk.

        i think it will come down to supervision requirements. does the doc need to be onsite, available by phone, etc. it will become akin to the step therapy issue i noted below. the push back will be — “we don’t have enough docs/dentists, so what do you suggest?” and they’ll come up with an expanded scope of practice/supervision requirements.

        it’s happening across the spectrum too. in a year or so, if i put in the training, I’ll be qualified to start a line in the field as an Virginia EMT-B. and that training is not going to be like what paramedics (EMT-I or EMT-P) do now.

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      • While I have an employer insurance plan, my doctor does not do insurance. It is strictly fee for service. A sore throat visit would cost me somewhere around $90. Since insurance is not a factor in my decision making, I go to the doctor when I really need to and for a yearly physical (which costs in the $350-$400 range). I am willing to pay this because I trust my doctor and the service she provides. Obviously I can afford it. That said, I use the service responsibly and she seems to charge responsively so it works for me (and my wife). She competes with a myriad of other doctors for me (who would cost me $20 bucks to visit). It is true that if I can’t pay, there is a chance she probably would not take me. But she might work out a deal…i don’t really know.

        I have told the story in other blogs on how I was on an HMO for years and never saw a doctor, then went for a checkup and wound up coming out of the office with a date for a major surgery. Subsequent to that episode, I became a very very frequent visitor to the doctors office, partly because of my operation and partly because it was “free” on the HMO plan. I abused the system, plain and simple, not because I was a bad person but because there was no incentive for me not to. Hangnail – better get it checked out!

        I realize it would have been problematic for me to pay for my operation out of pocket. And over the years (and leaving an HMO) I have become a rational user of medical services. What I have found from personal experience and from people I know is that if something is perceived as free, it will be abused.

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  5. Thanks NoVA, another excellent analysis. We currently have small group insurance as small business owners and it’s very expensive here in CA. Any thoughts on how they expect to, if they do (HHS), lower costs with such limited choices and lack of innovation by the states? I don’t get this lack of will to actually change the dynamics of coverage.

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  6. Thanks, NoVAH, it was worth the wait. Two items cause me concern.

    1 – the open ended categories, expansion to be lobbied over time – although I do not see an alternative of restrictive statutory language surviving over time; and

    2 – ” … God help you if you try, for example, to change a formulary to cover a generic vs. a brand name, or institute step-therapy in that prescription drug category.”

    I assume you are talking from experience about getting a newly minted generic OK’d. I think you and QB talked about this before. I do not know if I correctly understand “step therapy”. Thought it just meant progressing from one more minimal therapy to another, perhaps more invasive or expensive, in an attempt to minimize unnecessary cost or unnecessary drugs. Do I get it?

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    • re: step therapy, aka step protocol:

      that’s right. everyone is in favor of it. until it’s their drug/condition. it is particularly an issue with mental health treatments (see link below). patient advocacy groups/docs don’t like tweaking with a treatment regiment in the name of cost control.

      I had Medicaid in mind — sometimes a state will try to swap on drug for a cheaper alternative. it’s never popular. but it happens with Part D too. example here: http://www.medicarerights.org/pdf/Medicare_Drug_Plans_Should_Lift_Restrictions_on_Mental_Health_Drugs.pdf

      I envision this fight happening for every plan, in every state. and that’s just for drugs.

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  7. Thanks, NoVA. Looks like you have job security for the near- to mid-term, depending on what SCOTUS says about the mandate, severability, and the Anti-Injunction Act.

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  8. Worth a read, courtesy of David Brook’s Op-Ed today:

    “Making It in America

    In the past decade, the flow of goods emerging from U.S. factories has risen by about a third. Factory employment has fallen by roughly the same fraction. The story of Standard Motor Products, a 92-year-old, family-run manufacturer based in Queens, sheds light on both phenomena. It’s a story of hustle, ingenuity, competitive success, and promise for America’s economy. It also illuminates why the jobs crisis will be so difficult to solve.

    By Adam Davidson”

    http://www.theatlantic.com/magazine/archive/2012/01/making-it-in-america/8844/

    Brooks’ Op-Ed

    “Free-Market Socialism
    By DAVID BROOKS
    Published: January 23, 2012”

    http://www.nytimes.com/2012/01/24/opinion/brooks-free-market-socialism-.html?ref=opinion

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  9. patient advocacy groups/docs don’t like tweaking with a treatment regiment in the name of cost control.

    I recently got dragged into a dep in workers compensation case and that was one of the main issues. The workers comp carrier wanted them to experiment with a cheaper treatment regimen and the doc and patient weren’t too keen on the idea. But hey it’s cool as long as it’s not the government right?

    not to put too fine a point on it, but they’d better get f$$%ing comfortable with it. states are looking at scope of practice expansion for the “affiliated” providers. PA, NP, etc to address the shortage of physicians. people are going to see an NP and be happy about it.

    I work mosly with hospitals and this is occurring in hospitals. and now that more practices are being bought by hospitals, I see it happening there too. That and telemedicine are all the rage.

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  10. Quite an interesting thread. I’d love to blow the system up. Eliminate all deductions for employer provided health care. My wife’s a freelancer, so my family is effectively 70% freeloaders. United Healthcare calls me a few times a year to make sure that we don’t have any other insurance. Sheesh. I can’t complain too much as we’ve had generally good experiences with them. Their reimbursement rates are relatively low, so there’s only two urgent care centers in all of NoVa that take UHC.

    We side step the regular system from time to time. My wife came down with a bad case of strep (she’s an interpreter, so her voice is her job). Getting an appointment at the GP would mean losing a day of work on a very good job. So, we paid out of pocket at the urgent care center. Oh, did I mention the ones that DO accept UHC aren’t open late? I guess if it’s at night, it’s not urgent. I effectively got 30% back as we pay into a flexible spending account (yet another benefit targeted at the upper middle class).

    I have most dental work done on trips to Costa Rica. I had an abcess once (a blood blister formed that kept coming back). It wasn’t painful and we were going to CR a few weeks later, so I waited on it. Probably got lucky. Sure enough, I needed a root canal. The oral surgeon was a wizard (I’ve had cavities done that were more trouble) and it was about $250. The crown back home cost close to $1000. A year or so later, I lost a chunk of a tooth biting down on some crusty bread. Again, a few hundred bucks.

    One of my sons has been struggling with eczema for about a year now. It came on strong last winter. It took months to control it, during which time we experimented with various remedies. A combination of an OTC steroid cream and Aquaphor finally cleared it up. We were able to get an appointment with a dermatologist–four months later by which time it was under control. Then it flared back up again this past November. We tried the combination of a prescription steroid cream and

    No luck. He was scratching quite a bit and his skin got infected. Antibiotics have controlled that, but the prescription cream wasn’t doing the trick and the next available dermatologist was three months later. Fortunately, there’s a guy out in Vienna who won’t take insurance. He WILL, however, see you promptly. We’re finally getting some good advice (and a stronger cream that’s clearing up his skin). The best $175 I’ve spent in quite awhile.

    Insurance doesn’t mean that much if you can’t get an appointment. Republicans have a point there. It’s not just Medistuff, though.

    BB

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    • BB – I effectively got 30% back as we pay into a flexible spending account (yet another benefit targeted at the upper middle class).

      Really? This is only offered this to upper middle class folks? I have been doing this for years, prior to me becoming upper middle class… 🙂 In all seriousness, I have worked with a number of people who’s salary puts them in low – middle class and have taken advantage of this benefit. There are, obviously, people who can’t.

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      • I didn’t say only offered to the upper middle class, I said targeted to the upper middle class. Along the lines of the Thread That Must Not Be Named, please respond to what I wrote, not what you think I wrote. [To others in the group, Dave and I have met off line and he’s a really nice guy. So, my dander isn’t up. I still wanted to make the point.]

        My assessment is based on a few factors. The net savings is relatively modest for very high earners as the max value is $5K and so the max tax savings is $1500.

        Second, I suspect the benefit is unlikely to be available in many low wage jobs or those offered via small businesses. There are costs associated with offering this benefit. If you’re in the 50% that doesn’t owe income taxes, you can’t use the benefit.

        And then, unless you have known health care expenses, you need to be able to set the money aside and be able to spend it if you guessed wrong. For me, that might mean a fresh pair of glasses or a year’s supply of contacts. I can shift costs around–much more easily than those at the middle. A friend of mine (also another upper middle class earner) had a serious over-estimate in the amount of money he set aside. He wound up using it for laser eye surgery.

        If one faces fixed health care costs, then max it out by all means.

        I stand by my opinion that the primary beneficiaries of this tax code provision are upper middle income households. I suspect that those who have advocated for such a provision are well aware of the primary beneficiaries. So, I’ll stand by my use of targeted as well.

        BB

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      • It’s a tax-free credit, so the higher your tax bracket, the more valuable the benefit is to you. It would do Mitt Romney no good.

        We max out and use up ours every year.

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  11. My biggest feeling of injustice about the health care system is that people without insurance are more or less forced to pay full retail often at grotesquely inflated prices for services while the best deals are held for those with good insurance. While I understand the economies of scale and the bargaining power of large groups I find it somehow unfair that those least able to pay are often the ones stuck with the largest bills.

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    • Amen!!!!

      Watching United pay ZERO for my wife and I over the past ten years, realizing the entire value of our policy is of course the catastrophic coverage which fortunately we haven’t needed, along with the “bill reduction” you talk about jkt.

      And it would be bad enough if the difference between me and an uninsured person was 10-20% but my wife and I have literally paid as little as 25% of the retail bill thanks to United’s massive bargaining power. Ah the private market in health care…all kinds of wonderful unintended consequences!

      In fairness to jnc, he would be quick to point out correctly IMO that we do not have free enterprise in our health care system, therefore he reserves the right to still believe that if we truly did have free enterprise it would be a better system. I do not agree but I certainly respect his opinion and it’s a debate we’re never going to get answered. ACA is here as the band aid we all know it is, single payer is on the way, I read too many experts on this subject…costs will force single payer down our throats whether we want it or not. I know that’s anathema to some and great news for others.

      Like

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