Wise King Ralph Rules: Less Choice for the Self-Employed

Wise King Ralph

by James A. Bacon

According to Governor Ralph Northam, the way to ensure access to quality, affordable medical insurance for Virginians is to reject bills that would… expand access to health insurance for Virginians.

Yesterday Northam vetoed two bills passed with broad bipartisan support that would have allowed self-employed people to buy insurance through professional groups such as Realtors’ associations. He also vetoed a third, which would have permitted small businesses to band together to buy group health insurance for employees.

Northam’s logic was that the legislation could undermine the Affordable Care Act by providing an alternative to buying coverage on the state exchange, reports the Washington Post.

“Governor Northam’s administration has worked to expand access to affordable quality care for all Virginians,” said a statement released by the Governor’s Office. “The vetoed bills would address health insurance cost concerns for targeted segments of the population, but in doing so, could increase the cost of insurance for sicker Virginians in the marketplace.”

“Governor Northam today reaffirmed his commitment to a government-only, ‘one-size-fits-all’ approach to healthcare coverage,” said a statement from state Senate Minority Leader Thomas K. Norment Jr., R-James City, and other GOP leaders.

I often disagree with Norment, but he got this right. The state exchanges were set up to provide a medical insurance option for those who couldn’t find insurance anywhere else. Risks were pooled and government subsidies provided. But the insurance products are not attractive for self-employed professionals. Why not let them explore alternatives with less onerous charges and deductions?

One major justification for the health care exchanges is to provide an insurance option for people with pre-existing conditions. Yes, it is important to ensure that people with pre-existing conditions have access to medical insurance. But that is a broad social obligation — not an obligation of the self-employed.

If Northam wants to ensure that Affordable Care Act plans remain affordable for Virginians with pre-existing conditions, the subsidies should come from the state General Fund. That way, Virginians can know exactly how much they are spending to provide the access and can debate appropriate levels of support. Subsidies should not come from self-employed Virginians by means of obscure and non-transparent insurance pricing practices over which neither they nor the electorate have any say.

Medical insurance is more expensive in Virginia than almost any other state. Vetoes like this don’t help.

Why is medical insurance so expensive? Because the General Assembly has enacted so many coverage mandates, which outlaw affordable, no-frills insurance options. Because the Certificate of Public Necessity law thwarts competition and innovation among medical practitioners. Because occupational licensing laws have turned the medical professions into craft unions. Because the absence of price transparency makes it impossible for consumers to comparison shop for the best deals in discretionary medical procedures. Because the system is riddled with subsidies and cross-subsidies (like forcing the self-employed to subsidize those with pre-existing conditions) so nobody knows how much anything truly costs.

Health care in Virginia is a tangled knot, and untangling it won’t be easy. One way to start the process is to stop the subsidies and cross subsidies so actors in the healthcare marketplace (providers, patients, insurers) at least can make economically rational decisions based on the underlying cost of things. If we continue down the same path, Virginia health care will lurch from stopgap response to unintended consequence, leading to such widespread perversity, dysfunction and failure that even Wise King Ralph won’t be able to set it straight.

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20 responses to “Wise King Ralph Rules: Less Choice for the Self-Employed

  1. I really need an education about how Bills get vetoed and overridden in Virginia. Was there not a session in April where Legislators had an opportunity to override the Governor’s vetoes? Why then is he vetoing Bills in May? Will there be another opportunity for the GA to override these vetoes? Very confusing to me, but I’m sure someone mong the experts here can set us straight.

  2. The single most important provision in Obamacare – as well as all current employer-provide health insurance is this:

    1. – no one can be turned down regardless of their health condition
    2. – no one can be charged more than others in the same class regardless
    of age or health condition.

    If you REALLY wanted to level the playing field for insurance – then you’d put those same requirements on these other kinds of insurance

    OR

    you take it away from all insurance and let the insurance companies decide who they will and will not cover and for how much premium.

    As long as we pretend that these other plans being offered are the equivalent of employer-provided or Obamacare – we’re not being honest about the issue much less how to “fix” the problem.

    Make no mistake – right now – it is the GOVERNMENT that guarantees you health insurance if you get it from an employer or Obamacare.

    Does the government make that same guarantee with these “alternative” plans?

    If they DO and it’s really an apples to apples choice then I’d not support what Northam is doing.

    But if it’s not – and those who argue that Northam is wrong – when, in fact, these alternative insurance are not guaranteed issue and guaranteed premiums then we’re just being disingenuous.

  3. Gabriel: The Assembly passes a bill. The governor has three choices: sign, veto, amend. In this case, the governor offered amendments. If the amendments are accepted, the bill becomes law.

    The reconvened session on April 22 rejected the amendments. But it also failed to pass motions to make the bills law without regard to the governor’s objections. That needs 2/3 votes in both chambers. So the bills go back to the governor with two choices: sign as is or veto.

    What he has now vetoed will not be considered again. As noted, the rules allowed the Assembly to basically override the veto in advance, with that motion to make them law without regard to the governor’s objections.

    • Larry: The purpose of our healthcare financing system is to make providers and insurance companies rich. It does this by promising everybody any level of healthcare they want for little or no cost. It pays for universal coverage by forcing healthy and young people to pay far more than they should, so the old and sick pay little or nothing. Obamacare was Christmas Dinner and Birthday Cake all rolled into one for the providers and insurance companies.

      The problem with these alternate approaches is they break the code, open the barn door, give away the game (pick a cliche) by offering a bit more choice. Actually, they have been force to be so close to Obamacare, I’m not sure what the problem is now – but in theory they might not force every enrollee to pay for every service. Most healthcare dollars are waste. If people paid for it like food or housing, different choices would be made, costs would plummet and doctors would have Toyotas and not Teslas. Damn, can’t let that happen. So let’s do what government power exists for: equalize poverty and pain in the name of equity.

      Northam is a highly-paid medical specialist and his action was applauded by his peers.

      • re: ” The problem with these alternate approaches is they break the code, open the barn door, give away the game (pick a cliche) by offering a bit more choice. Actually, they have been force to be so close to Obamacare, I’m not sure what the problem is now – but in theory they might not force every enrollee to pay for every service. Most healthcare dollars are waste. If people paid for it like food or housing, different choices would be made, costs would plummet and doctors would have Toyotas and not Teslas. Damn, can’t let that happen. So let’s do what government power exists for: equalize poverty and pain in the name of equity.”

        Like I said – if you let the insurance companies deny coverage to those they don’t want to cover and then set the premiums at whatever level they wanted according to a persons age or health – a lot of people simply could not afford quality health insurance.

        What a lot of these policies are – are known as “crap” policies because they’re a lot like pet insurance in that they cover very little. If you had a major illness, they’d not cover much of it at all and you’d end up owing the hospital and providers thousands of dollars.

        Once again – tell me why you are guaranteed your health insurance and they cannot cancel you. Do you know?

      • I don’t begrudge Physicians for their salaries, in practical matter they don’t make that much.

        They aren’t really making anything over minimum wage until after residency, and that tied to a student loan repayment program that adjusts the payment every June (dependent upon salary).

        I begrudge the amount of Malpractice Insurance they have to carry and the yearly premium for that. Which is also an issue not just Physicians have but Nurses as well.

        We live in a litigation happy society, where everyone is looking for the fast easy buck. The easiest way it to sue.

        Insurance companies are always the one making fat dollars, look who’s pockets they line for influence and who they reward handsomely on the back end.

      • OTOH, Obamacare did standardize coverage, limit profit/overhead, eliminate denial of claims, etc., and thus drive out the fly-by-night insurers. Yes, there were $1/day sellers who paid some office visit expenses, and then dropped people like a stolen car when the got sick.

  4. re: ” They also promise nobody can be denied, which means the young and the healthy are required to vastly overpay for what they get. Obamacare was Christmas and Birthday Cake rolled into one for the providers.”

    No Steve. Consider for one second – what would happen if the Govt DID allow health insurance to :

    1. – deny coverage to any subscriber based on their own medical underwriting rules

    2. -charge each subscriber the premium that they would charge based on actual actuarial.

    This does not happen, NOT because the insurers would not do it but because the govt REQUIRES them to guarantee issue and guarantee what is known as commuting rating pricing.

    re: ” Most healthcare spending is wasted. In a world where people paid cash and actually paid attention, decided things on a rational basis, everything would cost way, way less and doctors might be driving Toyotas and not Teslas. ”

    Steve – this is LA LA Land. Tell me ONE COUNTRY on the planet that works this way. How about some of those 3rd world countries where cash is king? Can you name a single one where healthcare works this way?

    “These competitive payment plans upset the apple cart, give away the game, let the cat out of the bag (pick your cliche) and thus cannot be allowed to stand. As with this other little topic of the day, the purpose of government sometimes seems to be to equalize poverty and pain. This is called equity.”

    Like I said, let the insurance companies make the decision on who they want to cover and folks like you and me would not be offered insurance except at some gawd-awful price that we could not afford.

    You folks who think it’s the govt that’s the problem – are not living in the real world. Insurance companies would dump you in a heartbeat if they could and you WOULD have to use cash to go get your care.

    • No – I’m arguing for no insurance at all. No third party payers at all. If people are poor, improve the cash support, etc — but if they don’t get sick, they can spend the money elsewhere. Man, prices would tumble! Competition would be real! (Libertarian pipe dream, but economically very sound.)

      Just got ripped off by CVS on my Part D. Spilled and ruined some pills. The carrier owned by CVS wouldn’t allow CVS to offer me replacements at the negotiated price. A 90 day supply is normally $10 and I paid $60 out of pocket for a smaller supply. Yes, the nurses and ER docs are heroes, but the folks in the back office are robber barons. The robber barons wrote Obamacare.

      Look around Europe, Larry. COVID kills the unhealthy. Don’t think about healthcare, think about HEALTH. Do you see signs in those numbers that Western Europeans were that much healthier? Man, they died like New Yorkers! Belgium still has the highest death rate. If they are no more healthy, what’s the point?

  5. re: ” No – I’m arguing for no insurance at all. No third party payers at all. If people are poor, improve the cash support, etc — but if they don’t get sick, they can spend the money elsewhere. Man, prices would tumble! Competition would be real! (Libertarian pipe dream, but economically very sound.)”

    More LA LA LAnd. WHERE on earth , on the planet, does it work this way?

    “Just got ripped off by CVS on my Part D. Spilled and ruined some pills. The carrier owned by CVS wouldn’t allow CVS to offer me replacements at the negotiated price. A 90 day supply is normally $10 and I paid $60 out of pocket for a smaller supply. Yes, the nursed and ER docs are heroes, but the folks in the back office are robber barons.”

    yup – been there, done that with CVS.. also…

    but hey, if you didn’t have Part D, you could pay in cash and bargain for the best price, right? Ask all those folks who need insulin how that works.

    • Thinking very very hard about that. Premium is paid up for a while, but when it renews….What would insulin cost in the system I’m talking about? The prices of drugs make my case better than anything! Totally manipulated by the medical robber barons.

      And as long as that system rules, with the absolutely criminal list prices, then my strategy would be dumb. But if overnight the system flipped, the prices would fall like rocks. Honest prices based on real costs. Think epipen.

    • Steve says: “And as long as that system rules, with the absolutely criminal list prices, then my strategy would be dumb. But if overnight the system flipped, the prices would fall like rocks. Honest prices based on real costs. Think epipen.”

      Great commentary.

      Who created this monster of a mess? What did they say to us and promise to us when they create it to get it passed by Congress?

      The story, as I recall it, goes back to around 1994 when Hillary’s first massive Health Care plan failed to pass Congress.

      “Why,” Hillary was asked later by O’bama.

      She replied something like this. “We failed to pay off the insurance companies.”

  6. Thanks for these answers, SH, I’m reading them with interest. We have got to cut into this tangled, incestuous knot of cross-subsidies and opaque incentives and health care prices so much higher than other developed countries sometime, or the political reaction is certain to drive us to single-payer, in my view,as the voters’ way of saying “curses on the current system.” But what is far from clear to me:

    Is the current system amenable to any meaningful reforms that could salvage multi-payer insurance? Is our political system capable of enacting those reforms?

    Or is this a case where the people responsible for the worst abuses will never compromise because they already assume the gravy train is going to end soon, catastrophically, and simply want to eat their fill from the trough as long as possible?

  7. See the thing we do not “get” in this country is what the rest of the developed world is doing – and we reject.

    If the private sector does health insurance like most insurance works – like fire insurance, or auto insurance or you name it – they use what is known as “underwriting standards”.

    What this means is that they look at each case – like with auto insurance – things like age , accident history, type of vehicle, etc.. and then they do an actuarial calculated to determine what the premium should be.

    They do that with health insurance also if they are allowed.

    The problem is they are not allowed to do it with employer-provided insurance and Obamacare – but they can with “alternative insurance” and the way the alternative insurance stays ‘affordable” is that they limit pay outs to the point where they are called ‘crap” insurance.

    Employrer-provided and Obamacare – AND MEDICARE do not do that.

    So there are two different kinds of insurance – the FIRST kind that have govt-manded – guaranteed-issue – cannot be turned down, govt-mandated – no medical underwriting for premiums – eveyone pays the same premium no matter age or health.

    And the second kind that do not. The phrase used is “quality insurance” and specify 10 essential benefits:

    Prescription Drugs. …
    Pediatric Services. …
    Preventive and Wellness Services and Chronic Disease Management. …
    Emergency Services. …
    Hospitalization. …
    Mental Health and Addiction Services. …
    Pregnancy, Maternity, and Newborn Care. …
    Ambulatory Patient Services

    these other kinds of insurance do not provide all these benefits and the theory is that people can choose what they “need”.

    Look at that list and figure out what you KNOW you won’t need downstream – yet that’s what is being offered as “more affordable” insurance for self-employed and small businesses while those with regular employer-provided, Obamacare and Medicare DO cover all these services.

    We’re basically advocating a two-tier system – i.e. winners and losers. If you get a job with an employer who provides insurance, you’re golden. If you work for yourself or for a small business, you’re screwed.

    No other developed country on earth does this.

    • Don’t disagree that what we do is nuts. The status quo is awful. The problem is that Obamacare adds rather than subtracts from the madness.

      • Steve – do you know anyone that works for themselves and does not have access to employer-provided?

        For some folks, Obamacare is the only real option.

        How does Obamacare make things worse if it ends up providing insurance to folks who need it? What would those folks do if they did not have Obamacare?

        • Insurance itself – the third party payer system – is what makes things so screwy and expensive, and Obamacare doubled down on the problem. We lost an opportunity to go another way.

          • One would think if there is a better approach – just bring it online and people will switch from Obamacare willingly.

  8. Regarding Wise King Ralph:

    “RICHMOND — Gov. Ralph Northam is weighing the details of a statewide order requiring people to wear face masks to contain the spread of COVID-19, with an announcement planned for Tuesday.

    “Face coverings are an important part of the next steps. We’ll have more on that next week,” Northam said Friday, adding that his “homework” for Virginians is to procure face coverings for themselves and their families over the weekend.

    The details of the policy remain unresolved, but Northam said he is looking at a requirement “especially for individuals going into businesses.”

    “We’re trying to work through some of the details,” he added. “It’s an equity issue. We want to make sure everyone has access to a mask, and we also want to talk about how we enforce that.”

    Richmond Mayor Levar Stoney, who previously advocated for a delay of the city’s reopening, asked Northam this week to issue a face mask order for the city in a bid to contain the virus.

    “I applaud the mayor for wanting to do what’s safe in our city of Richmond. We also know facial protection is one of the ways we stop the spread of this virus,” Northam said.

    Northam said the new mask policy would apply to all of Virginia, not just Richmond.

    Speaking of masks, Northam said: “Wearing a mask could literally save someone else’s life. That is becoming clearer every day as we move further into managing this virus over the long term.”

    Northam, a pediatric neurologist, encouraged children to wear facial protection in public, noting that they can contract the virus and be asymptomatic but transmit it to others.” End Quote.

    Pay special attention to all of it, most particularly that last sentence.

    For more see:
    https://www.dailyprogress.com/news/state/northam-signals-coming-order-on-wearing-masks/article_4d5269dc-6746-5b1f-b5d5-964d89e5a93a.html?utm_source=WhatCountsEmail&utm_medium=NEWS%20-%20Daily%20Newsletter&utm_campaign=_NEWS%20Daily%20Newsletter

  9. Larry, federal rules permit health insurance companies to charge older people more than younger people with a limit of 3:1. https://www.healthcare.gov/how-plans-set-your-premiums/

    Many companies offering insurance coverage for employees don’t.

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