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That new insurance plan will cover a lot of things you may never need


If and when you finally get your hands on a new health insurance plan, you might notice something.

Your plan will cover a lot of tests and procedures that you may think you’ll never need.

Those services required by the Affordable Care Act are called essential health benefits, and some insurance brokers say they are why thousands of buyers on the individual and small-business markets are seeing plans canceled and replaced with costlier coverage.

Industry observers also say essential benefits could spread an epidemic of health care overuse.

What’s more, some benefits were hand-picked by lobbyists who sell health care, and others include procedures that doctors’ groups say are not essential or are even harmful.

But there’s a flipside: Insurance reform won’t survive if you strip away essential benefits. Including them in every plan is the only way all Americans can afford basic medical care, some experts say.

“You can’t make the benefits optional and expect people to absorb the costs on an individual basis,” said Rick Krause, vice president of employee benefits for Las Vegas insurance brokerage Kaercher Campbell and Associates. “In order to make plans reasonably affordable across the board, these programs need to be included.”

What got included, and how, depends on the specific benefit.

Some federal mandates came from state coverage requirements already in place. Some, such as annual checkups, are simply long-standing medical traditions, said Michael Caparso, an employee benefits specialist with National Healthcare Access in Las Vegas.

But other mandates came less from conventional wisdom and more from political winds.

“From what I’m hearing, lobbyists basically wrote this bill,” said Phil Randazzo, owner of Las Vegas insurance brokerage Nevada Benefits. “That’s who’s driving what’s in these plans.”

For example, look at chiropractic care. John Falardeau, senior vice president of government relations for the American Chiropractic Association, told The New York Times in December that “we’ve been in constant contact with our state chapters, just telling them, ‘Look, you’ve got to get in the room.’ ”

The push worked: Chiropractic care made it into the final benefits list in Nevada and many other states, athough Krause noted it was already in a lot of Nevada’s group plans, albeit in more limited coverage amounts.

Beyond chiropractic care, every new plan sold will have to cover dozens of services in 10 key areas. There’s maternity care, including hospitalization for birth and promotion of breast-feeding.

Also, there are annual film or digital mammograms for women older than 40, prostate cancer screenings for men 40 and older, autism screening for kids, gastric bypass surgeries, hearing aids, clinical trials and hospice care.

Cue the grumbling if you’re a single, healthy, 20-something guy who just wants a policy in case you break a leg riding your Kawasaki. Why can’t you buy a plan without maternity coverage, hospice care or autism therapy? And if your plan didn’t have all of that stuff, would your premiums be lower?

Probably, Randazzo said. Among his individual clients, premiums are up 15 percent to 30 percent in new plans, and business premiums are up 19 percent to 60 percent. Even Nevada Benefits’ premiums jumped 20 percent, and Randazzo finds plans for a living.

The essential benefits “add money to everyone’s premiums,” he said.

Then there are the two dozen group clients and 100 individual clients that Randazzo said are losing plans completely because the coverage doesn’t conform with essential benefits. They will need to shop for one that matches the mandates.

It’s tough to cough up an average on just how much essential benefits are adding to premiums in Nevada. Insurers can no longer charge big premium differences based on age or health status, so some people’s premiums are actually dropping, Krause said.

But Caparso gives an example of how much new mandates can boost premiums. Nevada’s autism mandate added 3 percent to the cost of plans sold in the state after it took effect in 2011.

The Council for Affordable Health Insurance said in April that pre-Obamacare mandates were already adding 10 percent to 50 percent to the cost of basic coverage in the states.

That’s bad for insurance reform, because young, healthy people are likely to pay a fine rather than buy coverage with dozens of benefits they don’t need.

Randazzo said he gets more than 100 calls a day, and he said he is “really only seeing unhealthy people calling. We’re not getting calls from the 31-year-old guy who just wants to buy health insurance.”

But there’s a big reason that 31-year-old must buy the new bells and whistles. It’s all about pooling, or spreading the costs among a lot of people who may never use the benefits. A big point of the law is to enroll as many people as possible to help cover the costs of people who actually need care, Caparso said.

Consider maternity coverage. A pregnancy and delivery in Southern Nevada can range from $4,000 for a routine birth to $600,000 if a baby is premature, Krause said. There’s no way insurers could cover those costs if they didn’t distribute the risk. Make maternity care optional, and you get what insurers call adverse selection. Only people who know they will need the care — in this case, women trying for or expecting a baby — will buy the coverage, and insurers couldn’t absorb the financial hit.

“They’re trying to make all of these benefits as readily available as possible without costs being prohibitive,” Krause said. “It’s the only way you can reasonably construct the rates.”

Krause added that people who balk at coverage they may never use should look at it this way: It’s like having homeowner’s insurance even though you’ll probably never file a fire claim.

Not all of the essential benefits are as much of a given as maternity care, though. Doctors’ groups say some benefits are not only unnecessary, but actually do more harm than good. And preventive-wellness benefits in particular must be provided for free, with no out-of-pocket patient costs, which could encourage more consumers to ask for them despite their risks.

Take the prostate-specific antigen blood test for prostate cancer. The U.S. Preventive Services Task Force gave the thumbs down in May 2012 to routine PSA screening, because it doesn’t save enough lives and can result in false-positives that lead to unnecessary treatment with unpleasant complications. Ditto for mammograms for women younger than 50 or older than 74 who are at normal risk for breast cancer.

Another essential benefit, hormone-replacement therapy for post-menopausal women, can be lethal, leading to higher risk of stroke, heart attack and breast cancer. Doctors quit prescribing hormone-replacement therapy virtually overnight when studies showed the links in 2002.

Then there is the annual physical, as time-tested a tradition as turkey at Thanksgiving. Supporters of Obamacare say they hope the newly insured will get routine physicals that detect problems before they balloon out of control and cost hundreds of thousands of dollars to treat.

But a 2012 international study from Danish researchers found that patients who had regular physicals died of heart disease and cancer at practically the same rate as those who didn’t have checkups. At least one researcher at the University of Pittsburgh School of Medicine pointed to the findings to tell the medical community to stop encouraging the exams.

The results may be why the Congressional Budget Office found in 2009 that preventive care actually increases overall health spending. Then-director Doug Elmendorf said the health care system won’t save nearly as much through early detection as it will spend on screening everyone for everything. Savings from early detection would offset just 10 percent of the cost of preventive screenings, Elmendorf said in a letter to Congress.

Worse still, whenever you give something for free, people will use more of it. That ultimately will cost insurance carriers and employers more, Caparso said. And those costs will eventually pass through to consumers, partly as higher premiums.

“Utilization is going to go sky-high, especially on services that are free,” Caparso said. “Revenue for providers will go up drastically; no doubt about it. There are definitely some good provisions in the law. If each one on its own merits passed, people would be thrilled to death. But this is a massive overhaul, and it’s created a gigantic opportunity for more utilization, and people who understand that in business and the health care delivery system are going to take advantage of it.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.

 

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