by Karan Chhabra

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Truth be told, it’s a rare day when healthcare news directly affects our otherwise-healthy, arguably-complacent millennial generation. But today was one of those days. United Healthcare (UHC), one of the nation’s largest health insurance companies, announced that—whatever happens to healthcare reform—it will uphold certain pieces of President Obama’s law. Aetna and Humana, two of UHC’s rivals, quickly followed suit. Word, dude, but how does that matter to us again? It matters because they’re preserving perhaps the only element of the law targeted at us:

…they would still offer coverage for dependents up to age 26 under their parents’ plans. The companies will also continue to offer certain preventive healthcare services without out-of-pocket cost-sharing.

Prior to Obamacare, insurance companies could knock you off your parents’ policies once you turned 19, sometimes later if you were a full-time student. We all know, though, that these days graduating from college doesn’t automatically equal financial self-sufficiency. For many of us, our “groovy lifestyles” don’t leave much cash for the decidedly un-groovy burden of a health plan.

photo credit:

photo credit:

As a result, prior to Obamacare, millennials had the highest uninsured rate of any age group; 27% of those between 18-24 and 28% between 25-34 were without health insurance as of the 2010 census. Extending parents’ policies to dependents under 26 was one of the first elements of the Affordable Care Act to officially be implemented, entering law on September 23, 2010 (a momentous day for multiple reasons—including my 21st birthday). But as we all know, the Affordable Care Act is currently on shaky ground, with the Supreme Court ready to issue a decision—possibly a strikedown—any day now, and the Republican party vowing to dismantle it if (or when) they take control of Congress in this fall’s elections.

So today’s news should have been welcome to all of us. Together UHC, Humana, and Aetna make up 22% of the health insurance market, and if Humana and Aetna were ready to echo UHC’s announcement with just hours’ notice, I’m confident multiple other companies will follow. It’s not just those of us “trying to become who we are” who have something to gain here; even if you’re gainfully employed, with benefits (lucky one), if you leave for graduate school, you can’t take that policy with you.

Perhaps more importantly, today’s news is a case of the private sector taking ownership over elements of Obama’s healthcare policy, a trend I’ll refer to as “Do-It-Yourself Healthcare Reform”

(h/t to @ChaseDave for the moniker). A large part of the Affordable Care Act consists of largely uncontroversial yet less well-known provisions that aren’t really affected by the individual mandate, which is arguably the most contentious part of the legislation (see Adrianna’s post for more detail).

Wait—doesn’t big business hate every single tentacle of the healthcare reform octopus? Isn’t it called the Job-Killing Health Care Law for a reason? Actually, whatever your politics, some aspects of healthcare reform are actually good for business, and the insurance industry stands to benefit in several ways. The individual mandate will (would’ve?) greatly expanded its customer base, and almost anything that lowers healthcare costs will also lower insurance companies’ expenses. “Payment reforms” typically fall into this category. For example, the government’s Value-Based Purchasing program will financially reward hospitals excelling in clinical quality and patient satisfaction: in other words, those hospitals providing better “value” for each Medicare dollar. Bundled payments would reimburse doctors and hospitals for entire “episodes” of care (e.g., everything just before, during, and after a heart attack) rather than each individual task performed in that episode, which many also hope will reduce costs and improve care. These programs and others were born as plans for the government’s patients, primarily seniors on Medicare, but interestingly, many private insurers are following their lead, coming up with demonstration projects without any government prodding. It’s good business for the insurers, not charity—if they can get doctors and hospitals to take care of their patients for less, that means more money to take home (snarky sidenote–aren’t they nonprofits?).

If all this would happen without government intervention, why do we need healthcare reform at all? Best question you’ve asked yet, fictitious interlocutor. Some aspects of healthcare reform are indeed good business; lowering costs, from the insurers’ perspective, is one of them. Others are “so-so” business; I’d say today’s under-26 coverage announcement is one of those, because it gives insurers brownie points without drowning them financially. Young people are healthier and cheaper to care for than older people, so I think UHC’s move was somewhat short of saintly. Actually, I’m still trying to figure out the motives here, and would love your comments. In most cases today, people don’t choose their health insurer–their employer does–so typically I wouldn’t think UHC made this move to attract customers, because the market is not truly competitive. But—and this is where things get interesting—healthcare reform changes that, too, because the creation of health insurance exchanges would make for much more competitive markets. The fate of healthcare reform is up in the air, though, so I wonder if UHC was making a big bet that Congress and the Supreme Court would leave insurance exchanges intact. It’d be very gutsy, though, and somewhat odd given that we’ll all have the Supreme Court’s decision within about two weeks.

But back to the question of why we need the government involved: there are some components of healthcare reform that, if implemented by one insurer, would be bad business. One such component is “guaranteed issue,” or the requirement that insurance companies accept patients regardless of any pre-existing health conditions they may have:

Should the mandate alone be struck down, and the companies are still required to cover people regardless of health status, the insurers have said people will buy insurance only when they become ill, causing premiums to rise.

The law already bars insurers from denying coverage to children up to age 19 with pre-existing medical conditions.

UnitedHealth said it recognized the value of this provision, but said “one company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage.”

The ban on denying coverage to those with pre-existing conditions will apply to adults starting in 2014, under the law.

DeAnn Friedholm, director for health reform at Consumers Union, said if a single company “declared they would take any comers, and their competitors do not, then they will immediately attract the sickest population, which would disadvantage them in trying to compete on prices.”

Guaranteed issue on the part of just one insurer would be awful business, and a coordinated move from every insurer is a pipe dream. But it’s absolutely essential to making affordable healthcare for every American a reality. While DIY health reform might move us forward, I doubt that alone, it’ll get us where we need to be.

UPDATE, 6/12/12: An article in Politico suggests a very interesting motive for the health plans’ moves—to pre-empt an effort by Congress to rewrite healthcare reform if struck down by SCOTUS. The idea is, if the private sector shows a desire to preserve some of the ACA’s most popular provisions, maybe Congress won’t have to force it down their throats (and maybe they can avoid some of the tougher provisions, like guaranteed issue).

Karan works in strategic research on health care and will begin medical school this fall.
Follow him on Twitter @KRChhabra.

Do-It-Yourself Healthcare Reform

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One thought on “Do-It-Yourself Healthcare Reform

  1. […] to us. As I discussed in an earlier post, the only ACA provision targeted at our age group—the requirement that insurers let children […]

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