Winging It

"The hardest part of this is getting the phone call from someone enrolled in a private insurance plan with a $500 monthly premium and a $2,000 deductible and having to tell them they're not eligible for Catamount
 Kevin O'Connor in the Rutland Herald

Before the reign of Howard Dean, it was possible, in Vermont, for young, healthy people to purchase affordable medical insurance from a number of carriers.  Then came community rating and most insurers fled the state. Those that  remained (think Blue Cross) raised their rates through the roof.  So what was achieved in the name of fairness was  medical insurance available to all at a rate so exorbitant that more and more people went without coverage. The Law of  Uninteded Consequences had, once again, asserted itself.

So, Vermont came up with a fix for this new problem, named it Catamount Health, and is spending a cool million and a half to promote it.  One wonders why, if it is such a good deal, the hard sell is necessary to get people to buy in. 

But this is Vermont where perversity is an essential element in most government programs.  We give people with homes worth a more than a million dollars a prebate check to help them out with their property taxes.  Income sensitivity, don't you know, and Vermont is nothing if not sensitive.

The Catamount health care fix makes cheap (i.e. "subsidized") medical insurance available to people who aren't covered while keeping people who are currently covered in their expensive programs.  If you have done the responsible thing and dug into your pocket for expensive health insurance, you will be punished in the form of paying higher premiums than those who took the risk of going without and can now get in on Catamount, a program that is denied to you.  The logic of Catamount is that uninsured people do not simply expose themselves to financial disaster; they put us all at risk.  Otherwise, why did we need a new state program to take  care of the problem?

But judged by purely pragmatic standards, Catamount isn't really much of a fix.  Simply insuring everyone does not mean that health care costs are suddenly brought under control.  Covering everyone can drive a state to the brink of bankruptcy, as the good people of Tennessee learned.  And requiring that everyone buy medical insurance, as Massachusetts has done, isn't really much of an answer, either.

In Vermont, the number of uninsured is, in fact, a less serious problem than what is called the "cost-shift," which Catamount may well exacerbate.  Under current arrangements, when a patient who is covered by Medicaid goes into a Vermont hospital for some expensive procedure and the hospital submits a bill, it will very likely be paid less than the actual costs of the services it has provided.  And Medicaid -- being a big bad government outfit, answering to nobody -- will say to the hospital, essentially, "Take it or leave it."

The hospital takes it and starts looking around for a way to cover the shortfall.  Which it does by overcharging  privately insured patients.  (If you have private insurance, then, you are covering not just yourself but the people without insurance and those who are "covered" by Medicaid.)  This shifting of costs onto private insurers obliges them to jack up their rates.  The price of the premiums, thus, becomes insupportable for more and more people.  They go uninsured and, eventually, perhaps, enroll in Catamount. 

Odds are that Catamount, rather than ameliorating the cost-shift problem, will exacerbate it.  Especially if the program is underfunded as seems possible, if not likely.  As the Herald article notes:

Gov. James Douglas and leaders in the Legislature have committed $3.5 million more in state money for Catamount this fiscal year, knowing it may cost another $7.5 million annually in 2009 and 2010.

Seven-and-a-half probably means ten.  Those folks tend to low ball their estimates.  And, if Catamount is underfunded, it will probably imitate Medicaid and stiff the providers who will, in turn, gouge those those with private insurance.

Vermont will, then, continue to punish those who are young and clinging by their fingernails to membership in America's middle class. Premiums for their medical insurance policies will continue to rise in order to provide affordable coverage for the previously uninsured. Also, their property taxes will continue to rise so that those who are income sensitized can get help with their tax bills. 

The state continues to design these vehicles that will -- we are promised -- carry us to a land of perfect fairness.  What happens, instead, is that the load gets heavier for people who will, in time, decide that they are weary of carrying it.  The state works on the principle of "You make it, we'll take it."  And sooner or later, people will decided they have had enough.

Catamount moves us closer to that day of reckoning.

Comments

[James Ehlers]

There are some who believe that is was actually the Law of Intended Consequences at work. Only Howard Dean, some of his advisors, perhaps, and a few at Blue Cross would be able to address that, however.