Saturday, February 28, 2009

Nuts Atttribute COBRA to Obama

I was surprised to read that Obama, who took office just last month, was to be credited with the passage of COBRA (the Consolidated Omnibus Budget Reconciliation Act, which among other things modified the Employee Retirement Income Security Act of 1974 to permit employees to obtain continuation of employee beenfit plans after losing eligibility as employees -- in other words, people who quit or were fired could keep employment-based health coverage for in most cases up to 18 months), which is an Act signed into law by Ronald Regan in 1986.

The author apparently is rather behind the times in health policy matters. The news is that continuation benefits under COBRA (for which employees are permitted to be charged up to 104% of the employers' actual cost to run the plans) will now qualify for a 35% federal subsidy (so they pay about two thirds of the unsubsidized cost), provided the employees aren't too well off.

The article also claims CHIP as a feather in the new President's cap. The State CHildren's Health Insurance Program, enacted in 1997, is a state-federal program designed to help families with kids who don't qualify for Medicaid coverage to obtain subsidized health insurance. In Texas, one of the significant barriers to enrollment under CHIP is that the federal government doesn't allow CHIP participation by anyone who can qualify for Medicaid (which would also provide coverage), so in order to qualify for CHIP one must first perform all the steps needed to enable the state to determine Medicaid qualification (else, the federales won't match the state's CHIP expenditures, even up to the matching funds cap). Assuming that prospective participants are properly educated that making more than a few thousand bucks per year isn't actually a disqualifier, but that the forms are just part of a federal hazing ritual, one still has a daunting stack of forms to fill out. This might not seem like a big deal, but to the extremely-busy two-job-working-poor this program should be helping, this kind of hazing ritual is a substantial barrier to entry. Additionalls, many people look at the forms, realize the economic thresholds inquired about are well below their incomes, and give up because they believe they cannot qualify. I'm not sure what amendment to CHIP may have been part of the recent stimulus package, but I'm wagering it's an increase in the federal match cap.

Pouring money into coverage schemes will have the effect of making coverage easier to obtain for the people who can afford their share of the price tag (two thirds of the cost of an employee benefit plan can be steep, depending on the plan), but it does nothing to the structural elements of the health care system that cause the U.S. to outspend every other nation in per-capita health costs. Contrary to the apparent claims of the Obama health policy team, the secret is neither tort caps or the supposed inefficiency of paper records. The most substantial and pervasive cost has to do with the fact that federal law has for decades prevented states from creating universal coverage through mechanisms that would eliminate health risk segmentation by third-party payors and ensure uniform minimum standards. By contrast, federal law has made health coverage a kind of "wild west" in which third party payors with even fairly tenouous connections to employee benefit plans enjoy a "get out of jail free card" in connection with their health coverage decisions. Thus, neither patients, physicians, nor hospitals know what's covered and it takes an entire army of dedicated full-time employees to call, punch through hold queues, and make a case for coverage of a whole host of things that are so obviously necessary or routine that such costly pre-treatment routines do nothing except add 50% to the cost of care.

This transactional friction is attributable directly to federal law, which has prevented state-by-state solutions -- notably in Hawaii and Oregon, but also elsewhere -- that would have helped teach the country how to obtain quality results for a good price under American-tolerable market conditions and without sacrificing expected quality. For someone in the federal government to claim interest in solving this problem with more federal law is the height of D.C. hypocrisy.

It is also utterly unsurprising.

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