by Mario Rizzo
I have taken a quick look at some of the provisions of the recently-passed House healthcare bill. What I want to do here is determine how it will affect me and others in a similar situation. I do not think my own situation is exceptional. I urge others to determine how it will affect them.
My situation: My health insurance is provided by New York University. They offer a number of plans each with distinctive features, coverage and monthly premiums. I have chosen a point-of-service plan with very good in-network coverage. (I don’t like HMOs because of all the permissions I have to obtain before seeing specialists as well as other rigidities and limitations.) It also has an out-of-network aspect that enables me to see doctors outside of the United Healthcare network. I like this feature because if I ever want a specific good doctor I can still have coverage regardless of the network he or she is in.
This feature of the plan does not offer very good coverage, however. For out-of-network doctors and facilities, in 2010, it will cover only 60% of customary and reasonable charges (usually less than many specialists charge in NYC) — with a yearly deductible of $2,500.
Now this is where the House bill comes in. In order to collect more taxes from “the rich” it will limit the amount I can put in a flexible spending healthcare account (my own pre-tax dollars) to $2,500. “Why should I have all of these untaxed dollars to spend on my healthcare?” they are thinking. Are they also thinking that I am rich? Many middle-class people have flexible spending accounts.
The effect of the limitation is this. Going outside of my network will become much more expensive. My choice of doctors, labs and hospitals will be more limited than before.
Previously, I was spending my own money and had some incentive to spend it prudently. (I would have greater incentive if the money did not disappear at the end of the year.) I could also use it for medical expenses not covered by insurance. (Dental insurance is normally not that good.)
I would now be basically stuck with in-network providers.
Does the House bill mandate better out-of-network coverage? I do not know the answer. (The full definition of what constitutes a “qualified plan” will not be determined until after the bill is passed!) But there are only two possibilities. First, it does not. In that case my healthcare coverage is worse than before – my choices are effectively more limited.
Second, it does mandate better coverage out-of-network. If my employer must continue to provide this option it will be more expensive and my premiums will rise. Of course, my employer could have given me a better plan at greater cost before. It didn’t need the House of Representatives to do that.
My employer might not continue this out-of-network coverage, however, since it must pay at least 72.5% of the higher premiums. It may not be willing to do that. Then my choices become completely limited to in-network providers.
Thus the effect of this one provision alone is either to limit my choice of doctors or raise the cost of my insurance.
There are many, many other provisions. I can understand neither most of the bill’s language nor how it will affect my situation in respects other than the above. Look at the thing!!!
In my own case, looking through the bill has made me feel small and powerless. Can we avoid becoming incompetent dependents looking to the State for our well-being? Oh I forgot: We have already become that. But I do hope we can avoid even more of the same.
Addendum: I understand the argument that to allow me to use pre-tax dollars on healthcare does not create optimal incentives vis a vis other uses of my income. It will encourage too much use of healthcare from a social perspective. But if we continue to allow the use of pretax dollars to pay for insurance premiums the market is already distorted. Any reform that tries to make up for lower flex spending by increasing the extent and cost of insurance coverage doesn’t solve that problem. Things get moved from one distorted payment method to another, arguably more distorted, method.
And then there is the major problem. The healthcare industry is already so filled with distortions caused by every kind of government intervention imaginable, that we are clearly in a second-third best world. So I have no idea what the humble flexible spending account does to the Optimality God.