Health Experts, Former Health Plan Insider Expose Dangerous Loophole in Senate Bill
American Heart Association, HCAN, Harvard health researcher, Ex-insurance company CFO, and North Carolina labor leader: Loophole Lets Insurers Still Charge More Based on Health Status
Washington, DC – On a national press conference call with reporters today, health care reform experts, a former insurance industry insider, and a state labor leader exposed a dangerous loophole in the Senate health reform bill that would allow insurers to discriminate against people based on health status. Contrary to a major stated goal of health reform, the Senate loophole would allow insurers, under the guise of health promotion, to dramatically increase the amount of money they can reward or penalize workers for meeting specific health targets.
Right now, workers who do not participate in wellness programs can pay up to 20 percent more than those who do. The loophole would raise that threshold to as much as 50 percent – essentially penalizing people who may be sicker and perpetuating the practice of medical underwriting that the insurance industry had pledged to abandon. The loophole would allow insurers to continue to game the system to increase their profits.
“Although described as 'incentives' this practice allows employers to raise costs across the board for everyone and then lower them selectively for those who meet certain health targets. So incentives quickly become penalties for those who cannot meet the targets,” said Sue Nelson, American Heart Association’s Vice President of Federal Advocacy. “Considering that 67 percent of adult Americans are overweight or obese; 45 percent have high or borderline high cholesterol; 32 percent have high blood pressure; and 21 percent smoke, it's clear that the majority of adult Americans will be seeing increases in the costs of their insurance coverage under plans like these."
As a result of the loophole, families could see a maximum penalty rise as much as $2,412 for an average single worker and $6,688 for an average family of four, according to an analysis of 2009 premiums by the American Heart Association, the American Cancer Society, and the American Diabetes Association.
In contrast, the House bill would support wellness programs through grants to help small employers create programs that meet strict requirements. Caps would prevent exploitation of the programs by employers and insurers.
“We shouldn’t be punishing people who have chronic health conditions or who have to run home from work to take care of their families and can’t go to the gym or can’t afford a gym membership,” said Richard Kirsch, National Campaign Manager, Health Care for America Now. “We should be encouraging people to participate in wellness programs, not charging people thousands of dollars more because they don’t look like a Hollywood star.”
Nelson, Kirsch, Harvard public health expert Harald Schmidt, former insurance industry insider Andrew Kurz, and Chuck Stone (Director of North Carolinians for Affordable Health Care for SEANC/SEIU Local 2008) urged Congressional leaders to discard the loophole when finalizing health care legislation in the coming weeks. The American Heart Association is one of more than 100 group signers on a letter to Congressional leaders against the loophole.
“Proponents of wellness incentives emphasize personal responsibility and often use car insurance as an example: good drivers should not have to subsidize bad drivers. But health is different. People don’t choose to be unhealthy. If it was just a matter of choice, they wouldn’t have the problem in the first place,” said Schmidt, a Commonwealth Fund Harkness Fellow at the Harvard School of Public Health who co-authored an article last week for the prestigious New England Journal of Medicine on the unintended effects of the loophole. “On top of that, not all are equally healthy. Generally, the poorer you are, the more likely you are to be unhealthy. When wellness incentives lead to cost shifting, less well-off people face an unacceptable ‘double whammy.’ They face health issues and then their insurance becomes less affordable. Incentives do have a role in health policy, but the current proposal goes in the wrong direction.”
Without the Senate loophole, support for wellness programs would continue as employers could reward employees for participation in worksite wellness programs.
“North Carolina state employees understand all too well the damage this loophole will cause,” said Stone. “A similar policy, adopted by the State Health Plan as a wellness initiative, will soon force tens of thousands of state workers into a substandard plan with thousands of dollars of additional costs impacting lower salaried workers, women, and minorities the most. Let no one doubt that other health plans will adopt such discriminatory provisions, leading to loss of privacy, mistrust between patients and health providers, and ultimately, higher health care costs.”
“Insurers can spot profits miles away. This is a loophole they will drive right through on day one,” said Kurz, former Chief Financial Officer of Wisconsin Blue Cross-Blue Shield. “It will not only harm millions of Americans who will be forced to pay higher premiums, but it also will undermine any other efforts to bar insurance companies from discriminating against customers because of their health status.”
