Health advocates: U.S. Senate plan encourages discrimination

WASHINGTON – Insurers and employers could penalize workers thousands of dollars for pre-existing conditions under the Senate’s health-care reform bill, according to a long list of academics, advocates and medical societies, which are pushing for elimination of the provision.

The proposal threatens to undercut a central goal of the Democrats’ health-care reforms: to eliminate the common practice of basing premium rates the health of patients.

At issue are employer-based wellness programs, which aim to prevent common conditions related to smoking, overeating, lack of exercise and other unhealthy behaviors — conditions such as diabetes, hypertension and high cholesterol. Both the House and Senate bills promote such programs, but the Senate bill, critics argue, would allow employers to raise rates on all of their workers, then lower them only for folks who meet certain wellness targets. Such a system would effectively force less healthy workers to subsidize the insurance plans of those more fit — an unfair penalty in the eyes of many medical groups.

“Incentives quickly become penalties for those who can’t meet the requirements,” said Sue Nelson, vice president for federal advocacy at the American Heart Association. “This would really become medical underwriting by another name.”

Current regulations allow group plans to offer rewards up to 20 percent of premium rates for employees who meet certain health goals. The Senate health-reform bill would effectively make that rule law, while also bumping up the variation allowance to 30 percent — roughly $4,000 for the average family plan. The Senate bill would also allow officials at the Health and Human Services Department to go even higher — up to 50 percent.

Outside of the group market, the Senate provision would also create a 10-state pilot program testing the advantages of the wellness incentives for individuals buying insurance on their own.

The provision was championed by Sens. Tom Carper (D-Del.) and John Ensign (R-Nev.), both members of the Senate Finance Committee, who argued during the panel’s health-reform debate that such market-based incentives for healthy living will put a considerable dent in the nation’s skyrocketing health care costs.

“Voluntary employee participation in these areas should naturally be reflected in lower healthcare costs,” Ensign said. “This isn’t just about offering financial incentives; this is about making Americans healthier.”

Numbers from the Centers for Disease Control and Prevention back Ensign’s claim. The cost to treat smoking-related ailments is more than $96 billion each year — roughly $1,400 per smoker, CDC estimates. For obesity, the cost burden is even higher, representing as much as $147 billion in annual medical expenses — also about $1,400 per patient, CDC says.

Critics of the Ensign-Carper provision don’t dispute those figures. But they worry that lowering premiums for some workers — those that hit their wellness marks — would inevitably mean hiking rates on those who didn’t.

“When you start picking people off on an individual basis [and] reducing their premiums individually,” Sen. John Kerry (D-Mass.) said during the Finance Committee markup, “you do not adjust for what else may be happening within that [coverage] universe, and then other people are picking up the overall costs.”

Ensign’s response to Kerry last September (effectively: “Exactly! Sicker people should pay more.”) highlights the central disagreement between the two sides of the debate.

Let us just say that you had 100 people and 25 people decided to get healthier and it lowered the amount of money that you had to spend for those 100 people. Not all 100 should benefit in that. Only the 25 that made the difference should benefit in that. That is fairness.

I mean, if the 25 are the ones who are changing their behavior and that is the reason you have to spend less, they should be the ones rewarded, not the people who did not change their behavior.

Members of the Finance Committee approved the amendment overwhelmingly, 18 to 4.

A similar provision, sponsored by Sen. Tom Harkin (D-Iowa), was attached to the health reform bill in the Senate Help, Education, Labor and Pensions Committee last summer.

At least one former insurance industry executive argued this week that it will take little time for companies to exploit the loophole in the Senate bill.

“Insurers can smell profits a mile away,” said Andrew Kurz, former chief financial officer at Blue Cross-Blue Shield Wisconsin. “This is a loophole they will drive right through on day one.”

Nelson, of the American Heart Association, conceded that the wonky issue is “tremendously complex,” making it difficult for critics of the Senate provision to get their message across. She said that advocates were able to speak directly with House lawmakers about the provision, but didn’t have similar luck winning an audience in the upper chamber.

“I wish,” she said, “we had had that opportunity in the Senate.”