Monday, February 2, 2015

"Adverse Tiering" and ObamaCare Leveling

One of a series of rows or ranks rising one behind or above another.

Definition, Tier

Welcome to the world of two-tier and multi-tier medicine. Two tier medicine is generally thought of as one class of people receiving basic, necessary government health benefits, often rationed and for which they must wait, while the other class in the private sector, who can afford to pay, receives faster better care.

Now we have another tier – “adverse tiering.” Harvard researchers have come up with the term – to describe the practice of insurers to place high-price drugs in the upper tier of costs to discourage people with chronic disease from enrolling in plans so the insurers won’t lose money (Douglas Jacobs, and Benjamin Sommers, “Using Drugs to Discriminate – Adverse Selection in the Insurance Marketplace,” New England Journal of Medicine, January 29, 2014)

“Adverse tiering” , the authors assert, drives insurers to discriminate against those with chronic diseases taking expensive drugs – HIV, mental illness, cancer, diabetes, rheumatoid arthritis, heart disease -- because the insurers fear “adverse tiering” will prevent “adverse selection” – the phenomenon wherein the insurer is confronted with the probability of loss due to risks not factored in at the time of sale.

The Harvard researchers say “adverse tiering” defeats the ACA’s main purpose – to end discrimination on the basis of pre-existing conditions. The ACA mandates that insurers insure all comers, and in combination with premium subsidies and Medicaid expansion, the ACA levels the cost playing field, and in the process, cover an estimated 10 million uninsured people. The authors argue the ACA prevents premium discrimination on the basis of health status and achieves a more equitable health care system.

This might be true in a perfect social welfare world but the reality is we can’t afford the social welfare programs we have. ObamaCare creates a host of other tiers – higher tier payments for the young, the unsubsidized, the middle class, for those who do not want health insurance, and for many of those who must pay for comprehensive essential one-size-fits-all government mandated benefits for all.

To confuse matters, there are three cost tiers within government – Medicare, Medicaid, and health exchange plans - paying 40% to 60% less than private plans. It could be argued Medicare itself has three tiers – regular Medicare, Medicare Advantage, and Medicare supplements, And there are, course, tiers within tiers in health exchange plans – bronze, silver, gold, and platinum, with different tiers for different plans in different states.

All these tiers , in one way or another , are evidence of discrimination based on price and service. To discriminate has another meaning, to select on the basis of choice and value and what is important to you. There will always be different tiers for different folks. That is part of the human condition

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