A real problem for patients with inflammatory bowel disease is the lossof the ability to get health insurance when changing jobs. This results in job lock for many. It also can be a disaster for children with IBD whocannot get health insuarnce at any new job. Recently a law was passed that would require insurance companies to provide insuranceif a person was previously insured. I get a newsletter about health issues,and am reprinting here an article I have recently received. It is an interviewwith senators Kassebaum and Kennedy.
Insurance companies are really not mean. They are simply responding to the competitive pressures that our laws have created. Suppose an insurance company wanted to be nice and just decided to insure people with chronic disease. Everyone with chronic disease would insure themselves with that company. Their rates would go up, the subscribers would leave, and the insurance company would be out of business. Thus, by being nice, they end up out of business, doing no one any good. This is an example where regulation works. By preventing all insurance companies from excluding people with previous health problems the competitive playing field is levelled, and no company can gain a competitive advantage by excluding people with preexisting illness who have previously been insured. Rates stay low, people stay insured.
There is also a long term benefit. The existance of this law makes it very desireable to stay insured. If you stay insured,chronic illness will not cause job lock or uninsurability. Under the currentsystem, if you do not get insurance and get a chronic illness you are notmuch worse off than if you are not insured at all. Insurance rates areawfully high, and many do not have insurance because of the cost. Withthe binefit of guaranteed future insurability the equation changes slightly,and more healthy people will want to be isnured to have the benefit ofthe law. With more healthy people participating, the premiums costs willbe pressured downward, and premiums can go further down as more participate.Where this settles will depend on the future premium rates and disposableincome, but it will push more people to be insured. I think this effectis not fully appreciated.
On the down side, the new law will not take effect for one year.
Thanks to Steve Freedkin for keeping the List.Healthplan active. Seethe boxed text below for subscribing information.
Stephen Holland, M.D.
Here is the article:
(c) Copyright 1996 MacNeil/Lehrer Productions and PBS
Both Houses of Congress have approved new legislation that calls for”portable” health insurance, and guarantees that a “pre-existing”condition will be paid for, even if a worker changes jobs. Tax deductionsfor nursing home payments also made it into the legislation, but mentalhealth benefits did not.
CHARLAYNE HUNTER-GAULT: The new health legislation is first of its kindin a decade and will affect millions of Americans. Known as the HealthInsurance Portability and Accountability Act, the bill requires insurersto offer policies to workers who changed jobs, insures that workers wholose their jobs cannot be denied individual coverage, guarantees that workerswith pre-existing conditions cannot be denied coverage for more than 12months, gradually increases the tax deduction from 30 to 80 percent forthe self-employed who buy insurance, and allows individuals to deduct costsof nursing home and other long-term care.
For more on the legislation and its impact, we’re joined by the bill’sauthors. Sen. Nancy Kassebaum, Republican of Kansas, is the chair of theLabor & Human Resources Committee, and Sen. Edward Kennedy, Democratof Massachusetts, is the ranking member of the Committee. Thank you bothfor joining us. Sen. Kassebaum, just what is the significance of this bill?
SEN. NANCY KASSEBAUM, Chair, Labor & Human Resources Committee:It will enable, it’s estimated 25 million Americans, to feel more secureregarding their health insurance. If you lose — if you’re losing a jobor changing a job, you worry about whether you’ll be able to maintain healthinsurance. This guarantees that if you’ve been part of a health plan, youcannot then be terminated, and particularly due to any preexisting healthcondition.
CHARLAYNE HUNTER-GAULT: All right. I want to get into some of the specif-ics in a minute, but Sen. Kennedy, let me — do you have anything to addto what Sen. Kassebaum has said in terms of the significance?
SEN. EDWARD KENNEDY, (D) Massachusetts: Just really one point, and Ithink she has said it well with regards to portability and preexistingcondition, but I think the power of this legislation is relieving familiesof a lot of anxiety. A lot of parents have a child that has some difficulty,some disability, and the family worries what is going to happen to thatchild when he or she grows up, or that worker that might be laid off andis not as well or healthy, as robust as they might have been and is goingto be out there and unemployed and really wondering whether they’re intheir senior years are going to be able to get any kind of health insurance,or someone that would like to move to a job and have a much greater opportunityfor themselves and their family, and that says, no, I can’t do it, becauseI just don’t know about that health insurance because I have my wife issick or my husband is sick. That kind of anxiety is an enormous burdenon so many millions of American families, it’s a real one. You might notbe able to put it into dollar and cents, but it’s a real one. This billaddresses that degree of preexisting condition, and it gives assurancethat people will be able to continue their health insurance, and it meansthat they’ll be able to move from job to job and still carry the healthinsurance. That’s important.
CHARLAYNE HUNTER-GAULT: All right. Let’s go through some of the specificson it then. That is the first major thing about it, that it requires insur-ers to offer policies to workers who change jobs. Explain how that willwork, Sen. Kassebaum.
SEN. NANCY KASSEBAUM: Well, it’s just that if you’ve lost a job or changeda job and you have had health insurance, you can’t just walk off the streetand say, I want this job and I want health insurance. You have had to havebeen on a health care plan. But if you moved and changed jobs and yourCOBRA benefits have run out as well, then an employer must offer a healthinsur- ance plan. And you cannot be excluded because of a prior healthcondition.
CHARLAYNE HUNTER-GAULT: Mm-hmm.
SEN. NANCY KASSEBAUM: Also, someone can start to work and if they have,umm, a heart — a health condition, ulcers, heart condition, whatever isdetermined as a preexisting condition, after a year’s time, then they haveto not be excluded again from an employers health plan that he would beoffering employees, she would be offering employees.
CHARLAYNE HUNTER-GAULT: Now, on the first one, Sen. Kennedy, one thatrequires insurers to offer policies to workers who change jobs, who bearsthe cost of that? How does that work? SEN. EDWARD KENNEDY: The employeeand, therefore, this is — we have to see within the states, as the statesare going to have important responsibilities, that some of it’s sharedwith the federal government to make sure that the premiums are not goingto go up out of sight, and one of — that was one of the real differencesbetween the House and Senate bill under Sen. Kassebaum, our bill.
It meant that all insurance policies were going to be available to peoplethat were going to be moving out or have some preexisting condition, andthe House would have tried to put them all in one policy, which would havemeant that the premiums were absolutely up through the roof, and it madeit inaccessible for people, but I — if I could just get back to one point,you know, what happens so often in, in Main Street America, as these familieshave paid into insurance companies for a long period of time, for ten,for fifteen, or for eighteen years, and suddenly they find a husband ora wife, a preexisting condition.
They may develop cancer. You know, what happens in so many instances,they are cut off, they are terminated. That policy is ended, or if a childis very, very sick, that policy is ended. That happens, every communityin America, and this addresses that issue.
C HARLAYNE HUNTER-GAULT: But explain to me this part, where it saysit guarantees that workers with preexisting conditions cannot be deniedcoverage for more than 12 months, why is that there, for more than 12 months?What exactly does that mean?
SEN. NANCY KASSEBAUM: That’s because, as I said earlier, if you havemoved to a job that is offering health coverage but you have a preexistingcondition, and you have not been covered before, that you cannot be –you cannot be denied for more than 12 months. During that time, you wouldbe urged to be a participant in the plan, but you may not have a preexistingcondition covered until the end of 12 months time. But that’s for someonewho has never been part of a health plan.
CHARLAYNE HUNTER-GAULT: Oh, I see.
SEN. NANCY KASSEBAUM: Let me just say too, umm, it’s like any otherhealth plan. I mean, this isn’t something new. We’re not dictating theterms of new health plan. It could be Blue Cross-Blue Shield, or whateveran employer is offering, so an employer may pay part of the benefits asthey do in, in many plans, or it would be employee contribution. That isto be determined. It’s just that they cannot be denied.
CHARLAYNE HUNTER-GAULT: Mm-hmm. Now what about — there’s also individ-uals can deduct costs of nursing home and long-term care. Now tell me aboutthe importance of that.
SEN. EDWARD KENNEDY: Well, I think as all of us know the growing numbersof elderly in our communities, in our homes, we’re blessed with the factthat our parents are living longer, and I think in an ideal world, we wouldlike to have them have the option of either remaining at home or in a communitysetting so that they can remain at home in a community setting, or in termsof having nursing home help and assistance.
The amount of resources in a family that’s extended in the final severalmonths of one’s life are really extraordinary. And what we have tried todo, this program, is to try and provide through the tax program help andassistance to those families both in terms of getting insurance and beingable to cover some of those extraordinary expenses. It’s one of the areasof greatest concern, I think first of all to the parent, because the parentknows that they are draining the family’s resources and of course, theson or daughter knows that because they are seeing that they have to wantthe best in terms of the parent, the best in the care, and they’re worriedbecause they’re sacrificing the children’s future education.
So this, again, provides enormous tension and anxiety for those families,and this provides some relief. It doesn’t do all of the kinds of thingswe’d like, and let me just finally say I would hope that we can build onthis in the next Congress. We didn’t achieve all we would have liked, orat least I would have liked to have seen, that President Clinton wouldhave liked to have seen in the last Congress, but we’ve made a great progressin this one, and I hope we can continue the bipartisan effort, and thatwe can continue to make progress —
CHARLAYNE HUNTER-GAULT: Sen. Kassebaum, let me just ask you about thepart about the self-employed, who can buy insurance now, or get an increasein tax deductions. Explain that one, briefly to me and the significance.
SEN. NANCY KASSEBAUM: Yes, and also let me say on the long-term healthinsurance credit, this was something that Sen. Dole added, and which wasunanimously supported in an effort to encourage people to take long-terminsurance. This has been very expensive, and this will be a tax creditdesigned to encourage that people take that type of insurance. The self-employment —
CHARLAYNE HUNTER-GAULT: Excuse me. How much of a tax credit?
SEN. NANCY KASSEBAUM: What is that amount? I can’t think of what itis.
SEN. EDWARD KENNEDY: Well, it’s a modest credit, and it builds up overa period of years.
CHARLAYNE HUNTER-GAULT: Right.
SEN. EDWARD KENNEDY: It’s not going to offset the types of costs butit’ll help relieve, I suppose, people probably 30, 35 percent of the kindsof burden that they would have for maintaining someone in, in a nursinghome.
CHARLAYNE HUNTER-GAULT: All right. Let’s go —
SEN. EDWARD KENNEDY: But it’s the beginning of a program. I think itcould be built over a period of time. It’s constrained really because ofthe cost of it, but it’s a down payment; it can be expanded; hopefully,it will over a period of time.
CHARLAYNE HUNTER-GAULT: All right. Sen. Kassebaum, for the self-employed,yes.
SEN. NANCY KASSEBAUM: If you’re self-employed, currently you’ve beenable to deduct 30 percent of your insurance costs. Umm, this will now enableyou to deduct 80 percent. Umm, this is to balance what an employer candeduct 100 percent of the costs that they have to cover employees, forinstance, and this will be a balancing of fairness to those who have –are self-employed.
SEN. EDWARD KENNEDY: See, this has the larger employers are able totake the whole deduction. The small employers are not individuals, andwhat happens is you find out that in small businesses, as well as individual,they pay about 35 or 40 percent higher premiums. So they don’t get thefavorable tax treatment, they’re paying more, and it’s, it’s amazing tome that smaller businesses are, or individual, self-starting companiesprovide the coverage that they do.
CHARLAYNE HUNTER-GAULT: I understand that the Senate has just passedthis bill, and the House earlier and just a few minutes ago the Senatepassed it 98 to nothing, so what does that mean in terms of — Sen. Kassebaum,there’s a wonderful smile on your face, listening to that news.
SEN. EDWARD KENNEDY: Well, she should — if I can take — before sheanswers, under Sen. Kassebaum’s leadership, it passed unanimously in theCommittee a year ago today, it passed unanimously on the floor, and nowshe’s got a unanimous win.
CHARLAYNE HUNTER-GAULT: All right. Congratulations. When does this gointo effect, Sen. Kassebaum?
SEN. NANCY KASSEBAUM: July 1st of 1997.
CHARLAYNE HUNTER-GAULT: In other words, a year from now?
SEN. NANCY KASSEBAUM: Yes.
CHARLAYNE HUNTER-GAULT: Now, Senator, you said a few moments ago thatthis bill obviously doesn’t do everything that you wanted it to do, itdoes little for the 40 million people who don’t have insurance, there’sno equivalent coverage for mental health. Is legislation to cover thoseand other things likely to happen in the future? I mean, is there now amood to move on, on health care reform?
SEN. NANCY KASSEBAUM: I’m sure there is, and Sen. Kennedy, of course,has been a real pioneer in that. I am retiring at the end of my term thisyear, and Sen. Kennedy will be here to carry on. Sen. Domenici just todayintroduced legislation regarding mental illness and coverage for such.Both Sen. Kennedy and I have joined as co-sponsors, and there’ll be a hearingon that bill in September.
CHARLAYNE HUNTER-GAULT: Right.
SEN. NANCY KASSEBAUM: We’re also supportive of the 48-hour stay fornewborn mothers in the hospital, which Sen. Bradley has introduced, andwe are both supportive. So these are measures that are out there, I thinkdesigned to help in particular areas where there is a real need. And letme say on the legislation that we’re talking about that we’ve just passedand that’s upcoming, after having a clip of what you showed earlier, thisshows where bipartisanship can come together.
It’s not always easy, and we don’t always agree, and we can spend somecountless hours debating, but at the end of the day for the best interestof legislation that we felt was important, it did take bipartisanship,and that did come together, and I think that’s what made it successful.
CHARLAYNE HUNTER-GAULT: Great. Well, thank you both for joining us.
SEN. EDWARD KENNEDY: Could I just add — mental health has been thestepchild of our heath care system, so we hope we can make some progress.
CHARLAYNE HUNTER-GAULT: Thank you, Senator. Bye.