Look for Collection Account Balances to Fall Under Universal Health Care, Not Volume

American Health Insurance Plans, a trade association representing health care insurers, said last week that it would guarantee coverage for all Americans if the federal government required that all individuals get coverage.

The proposal, which comes within days of Sen. Max Baucus’ health care reform proposal, is yet another sign of growing support for universal health coverage (“Sen. Max Baucus Gets Debate Going on Capitol Hill with Health Reform Plan,” Nov. 18). Health care facilities analysts widely believe that a government mandate that all individuals get health coverage would make health care more affordable and lower hospitals’ bad debt expense given that uninsured patients account for the bulk of that expense.  AHIP, however, stopped short of saying consumers would see lower premiums immediately or eventually. 

“That’s only part of making health care coverage affordable,” said AHIP spokesman Robert Zirkelbach. “Health care premiums follow the cost of providing health care services.  We need to expand disease management and care coordination to assist patients in getting the care they need.”

The U.S. Census estimates more than 45 million people were without health care coverage last year.  Philippe Villers, president and founder of FamiliesUSA, a non partisan advocacy group for affordable health care, estimates that number has grown to nearly 50 million in the last year. And nearly 90 million people went without health coverage for all or part of 2006-2007, despite 80 percent of those individuals having a working person in the home, Villers said. 

Even if universal coverage becomes law and premiums decline or the pace of rate increases slows, some health care industry experts expect consumers to get little relief from the co-pays and deductibles that have made unpaid patients’ portions of medical bills the fastest growing segment of bad debt expense. 

“Just because you insure more people, it’s not going to drop people’s co-pays and deductibles,” said Kaulkin Ginsberg Health Care Analyst Michael Klozotsky.

A universal coverage mandate, however, would increase patient portion account volume for medical debt collectors because more people will see care and be responsible for some portion of the bill, Klozotsky said. But look for account balances to decrease as insurers pay costs previously the responsibility of individuals, he said. 

In any case, more industry experts feel confident that major health reform will happen under an Obama administration.  Villers said AHIP’s proposal itself is a sharp reversal from the position some insurers took during the Clinton Administration when insurers ran TV ads to derail health care reform.

“It’s a constructive proposal,” Villers said of AHIP’s proposal. “It has some of the elements of what would make sense and its shows a more positive attitude than in the past.”

While Villers agrees that an individual coverage mandate makes sense to achieve affordable health care, he said exemptions for an affordability test also must apply, as is the case in Massachusetts where universal coverage legislation has been in effect nearly two years.  

“If you have enough income where you don’t qualify for a subsidy, but fail the affordability test, then the mandate (shouldn’t) apply,” Villers said.