One was in the Boston Globe: “Firms Cancel Health Coverage.” According to the article, a number of small businesses had recently decided to stop offering insurance to employees. In 2006, Massachusetts put in place a new health insurance scheme similar to the Patient Protection and Affordable Care Act, the federal law President Barack Obama and congressional Democrats passed earlier this year. If businesses in Massachusetts were now dropping coverage three years into that state’s reform experiment, people might conclude the same will happen across the country. And they probably wouldn’t like that very much.
The other headline was in Sunday’s New York Times: “Insurers Push Plans Limiting Patient Choice of Doctors.” As the story explained, insurers in three cities (Chicago, New York and San Diego) were testing new plans that offered beneficiaries significantly reduced networks of doctors and hospitals, in exchange for lower premiums. The target audience, again, was small businesses, but the insurers thought the new plans might appeal to some larger businesses as well.
This isn’t the first time insurers have offered plans with fewer treatment options. It happened most famously in the 1990s, when insurers first introduced the concept of “managed care” on a wide scale. Consumers didn’t like it then, and they might not like it now. But last time, most people blamed the insurance industry. This time, they might blame the government--in no small part because reform critics will use the occasion to say, “I told you so.”
Taking the blame for anything and everything that goes wrong in health care has always been the biggest political danger to reform, at least in the short term. The Obama administration and the Democrats now “own” health care just as surely as they own General Motors. But before Sean Hannity or the Wall Street Journal editorial page get their hands on these stories, let’s be clear about something: Those headlines don't highlight reform’s problems. They actually highlight its virtues.
Insofar as the articles report broader trends--and they may not--they actually chronicle the same basic process at work. Health care is getting more expensive; the economy is still sputtering. Employers who provide and help pay for employee coverage can react to this in one of two ways. They can stop offering insurance altogether, which is what the Globe reports some small Massachusetts firms are doing. Or they can simply offer less generous policies, which is what the Times suggest will happen in those three cities.
But employers were doing these things already, long before Obama and his allies came along. Firms have been walking away from coverage ever since the early 1970s, when rising health care costs first hit American business hard. The question is whether reform makes employers more likely to drop coverage. The answer seems to be no, at least for now. Reform includes a requirement that employers provide insurance or pay a penalty. Although the Globe story suggests a few firms are dropping coverage, the official data shows that, overall, the number of employers offering coverage actually increased after Massachusetts implemented its new scheme.
That doesn’t mean every company that offers insurance will keep doing it forever. Over time, some businesses will inevitably decide to drop coverage, just as they do now. But before reform, employees in such companies were frequently in big trouble, since they no longer had access to decent policies they can afford. In Massachusetts and, soon, the rest of the country, people without employer coverage will be able to get comprehensive policies through insurance exchanges--complete with subsidies to help pay for them.
But what about the people who watch as employers whittle down coverage, restricting which doctors and hospitals they can see? Again, this happened before and was bound to happen again--only now, thanks to health reform, the law will limit how plans can do it. They can’t impose cost-sharing for basic preventive care. They can’t impose annual or lifetime dollar caps on benefits. And while they can limit beneficiaries to certain doctors and hospitals, they have to offer beneficiaries the right to appeal treatment denials--and the right to get treatment out-of-network if it’s not available in-network.
These guarantees aren’t as strong as they could or should be. Future legislators, hopefully, will improve upon them. But they provide real security, the kind that didn’t exist before--and the kind that most Americans should appreciate, even if the critics of reform don’t.
This column is a collaboration between TNR and Kaiser Health News. KHN is an editorially independent news service and is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization, which is not affiliated with Kaiser Permanente.