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DEFINING AFFORDABILITY
Ernie Sweat CEBS
UAHU President-Elect

 

In Jacobellis v. Ohio (1964) Supreme Court Justice Potter Stewart uttered the famous line:  “I can’t define pornography, but I know it when I see it.”  Perhaps we could benefit as an industry from the well seeing eyes of former Justice Stewart as we attempt to define affordability in health insurance.  That being said, this is a daunting task that even the stalwart Mr. Stewart would likely have taken a pass on.  Arriving at a definition of affordability that would truly apply to all may in fact be an impossible task.

 

The insurance industry is under fire to provide quality and affordable coverage.  Certainly it is the opinion of Governor Huntsman and the Utah Health Care Task Force that affordable health insurance will reduce if not eliminate the uninsured population altogether.  As an industry we are extremely eager to hit that target and please our legislators as well as the public as a whole with the results of our efforts.  Doing so would come extremely close to being hailed as a heroic effort.  Many members of our organization would love to be held in such high regard.  The problem of course is that we do not even know what the target looks like, much less what direction to aim.

 

Despite its portrayal in such Hollywood blockbusters as The Rainmaker and John Q, the insurance industry is truly at its best when faced with the prospect of a large claim.  Special care management teams are employed to make sure that the absolute best care is provided.  Make no mistake, cost management plays a very major role here as well.  However, despite a seemingly overwhelming view to the contrary, meeting the approval of the claimant as opposed to the shareholder is the overriding objective. 

 

Knowing this, it would seem extremely obvious that the insurance carrier would put forth a similar effort to meet the demands of the public.  The fact is that the public has demanded affordable coverage for decades and there is a litany of acronyms and terminology left in the wake of the efforts to meet this demand.  We have managed care, managed networks, PPOs, HMOs, EPOs, DRGs, capitated plans, formularies, coordinated care management, at risk contracts, staff model networks…and the list goes on and on.  Taken together, this list is a brief history of ideas implemented by some extremely brilliant minds to help us hit that elusive target.  Their work has for the most part been for naught for one very simple reason.  We as a society have never truly defined affordability and therefore can never truly define their success.  Should it be any wonder that we allow politicians to undermine some of the cost containment measures created?  What harm can be done by a mandate bill raising premium 2% when we have not determined what exactly is the threshold at which a person will purchase insurance or not?   It is certainly difficult for the insurance industry to oppose such legislation based on the affordability argument.

 

In the Fall of 2008, a handful of UAHU members including myself and Mike Oliphant (Author and Designer of the UAHU portal proposal) had the opportunity to address the Insurer Group as well as the Utah Health Care Task Force itself.  Our intention was to present our vision of an internet portal, however during the preparation of our presentation something rather eye opening occurred.

 

We knew from health department data that there were approximately 300,000 Utahns without health insurance coverage.  We felt the need to define who these individuals were in an attempt to put together a strategy to reach out to them.  Interestingly enough, once we filtered out those who were eligible for Medicaid or CHIP coverage who for whatever reason failed to enroll as well as those simply meeting a waiting period for group coverage, we were left with two distinct groups.  Both of these groups were uninsured because they could not afford coverage.  One group, the declined, wanted to be covered but were relegated to either COBRA coverage through a previous employer or the Utah Uninsured Risk Pool (HIP); and that coverage was not affordable.  The other group, the accepted, were either eligible for coverage through their employer or could easily qualify for a personal policy.  They also felt the plans were not affordable.  In one example we found an individual offered health insurance though his work at $17 per two week pay period, and still declined to enroll.

 

As a society, what we truly have to do is view health insurance as a product that has value; and let the market determine affordability.  More time needs to be focused on educating the public as to why this product has great value.  Only then can we begin to truly make a dent in the number of uninsureds.  Government still has a role, and we must continue to find ways to cover the under-privileged as well as offer better price points for those seeking coverage.  The new Net Care plan will fit nicely within this scheme.  As a counter to other arguments we have heard, trying to create an all encompassing system of government paid coverage for all will not successfully reduce the number of uninsured without creating value.  The lack of 100% enrollment in public paid programs belies this fact.  It should also be mentioned that such a plan would create an affordability issue for a group not yet mentioned, the tax payer.

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