Shawn Vestal: Kreidler fears ‘dumbing down’ of health insurance

Mike Kreidler calls it “dumbing down” health insurance.

The Congressional Budget Office uses a different metric to measure the worsening of health insurance now proposed in Congress: sinking actuarial value.

Actuarial value is the proportion of medical care that an insurance plan covers. Monday’s CBO report on the Senate’s proposal to replace Obamacare notes that, on the individual market, typical insurance plans that are supported by a tax credit will shrink from a 70 percent actuarial value to 58 percent.

In other words, insurance plans will pay a lot less of the bill, and people will get less help affording it from the government. Meanwhile, insurance plans will be allowed to exclude more types of medical coverage.

Heck of a reform, Brownie: Costs more, covers less.

That’s among the many reasons the GOP’s health care bill seems to be running aground in the Senate (though, to be fair, it’s also in part because some senators desire an even more draconian bill). It would result in millions fewer people covered – some by choice, some driven out by rising prices, some cut from Medicaid – and worse, more expensive coverage for the poor and elderly, according to the CBO.

These increases would be extreme in some cases. A 64-year-old single person, for example, would see an annual premium hike in a “silver plan” from $6,800 to $20,500.

Dumbing down, indeed.

Congressional Republicans “seem to equate all insurance as equal,” said Kreidler, Washington’s insurance commissioner. “All insurance is not equal.”

Kreidler is a Democrat and an unabashed supporter of the Affordable Care Act, and so it’s not surprising that he is dismayed by the efforts to undo it. Our state, and his office, has embraced the ACA, and he argues that’s why it has worked better here: Almost half a million Washingtonians have gained insurance, and the early embrace of the law by Kreidler and the state included forming a marketplace that is healthier than most – though premiums on the individual market are rising by an average of 22 percent.

And two counties – Klickitat and Grays Harbor – were left without an insurer willing to sell policies in the coming year. Kreidler managed to persuade one insurer to return to Grays Harbor and said two are now coming to Klickitat County. He said rural areas have always been problematic for insurers, going back to before the ACA, and that the current congressional proposals would only make it worse.

“They’re not offering substantive reforms,” he said. “They’re trying to go back to what we had before.”

It’s not that he thinks there are no problems with Obamacare. He has concerns about the aforementioned rural markets, as well as rising prices and the out-of-pocket costs for consumers. This has been one of the main rhetorical attacks on the ACA from conservatives – that it has made it too expensive for some people to use, by requiring that insurance plans offer a wide range of benefits.

But the House and Senate proposals make that problem worse, he said – allowing insurers to sell less for more. The CBO notes, for example, that the deductibles for a plan with a 58 percent actuarial value would be so high that “despite being eligible for premium tax credits, few low-income people would purchase any plan.”

The CBO released its evaluation of the bill on Monday, and by Tuesday morning enough Republicans were defecting to sideline the proposal. The CBO report said the bill would result in 22 million fewer insured Americans by 2026. It would cut $424 billion in insurance subsidies and make drastic cuts to Medicaid spending over the same period – $772 billion.

(Fun fact: Half of all births in Washington state are covered by Medicaid. At least for now.)

The “upside” to worsening the insurance market for vulnerable Americans? Dramatic tax cuts for insurance companies and the capital gains of the wealthy, totaling more than $300 billion by 2026.

Kreidler watched the talking heads debate the bill on the news Tuesday morning as he was walking on his treadmill, he said. Among the refrains from supporters of the bill is that they want to return “personal responsibility” to the health insurance market.

Kreidler has a different idea of personal responsibility – one in which each of us is responsible to prepare for the possibility that we may need medical care that we cannot predict. Accidents. Cancer. Brain tumors. Health problems befall people without warning.

“Bad luck is something that can happen to anyone, regardless of age,” Kreidler said.

Without a mandate requiring insurance, healthy people will free-ride until a catastrophe, he said. Without a list of essential benefits, insurers will peddle junk plans and prices will go up for the nonjunk. What works in insurance, he said, is a lot of people sharing risk – as people leave the pool for different reasons, “the pool gets sicker” and coverage gets more expensive.

The Senate bill seems about to perish. If you listen to Kreidler – or the CBO – that would be a merciful end.

“I’m still just staggered from the profound implications it would wind up having to the insurance market,” he said. “I just don’t know how you can see so many people go uninsured.”