It might have looked as if real progress toward healthcare reform was made last week when leading insurers proposed ending their long-standing practice of charging higher rates to sick people and denying coverage to those with chronic conditions.
But not so fast.
A closer look at the insurance industry's plan reveals a potentially huge loophole that could short-circuit genuine reform.
The insurers are saying that they'll treat all people fairly in return for a government requirement that everyone buy their product.
Yet if you read the fine print in their plan, it turns out that they're reserving the right to charge different prices for different levels of coverage -- a practice that would effectively keep us where we are, with sick (or potentially sick) people paying more for insurance.
The loophole was included -- "hidden" is a more apt word -- in a letter sent to prominent senators from a pair of industry leaders: Karen Ignagni, president of America's Health Plans, an industry group; and Scott P. Serota, president of the Blue Cross Blue Shield Assn.
The letter featured insurers' willingness to adopt a more inclusive coverage policy in return for "an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance."
In other words, a government mandate that everyone become the industry's customers.
That's not quite as self-serving as it sounds. Universal coverage is feasible only if the insurance risk is spread among the entire population, thus making coverage affordable for everyone. A government mandate will probably be part of any healthcare reform solution.
But Ignagni and Serota go on to say, almost in passing, that "benefit design" will be needed to keep policies affordable.
That's insurance-speak for offering bare-bones coverage at relatively low prices and more complete coverage at higher prices -- basically the same sort of system we have now.
"We're telegraphing that if people are allowed to buy more, then it will cost more," Ignagni told me. "You wouldn't charge the same for a Cadillac as you would for a Ford."
The danger, however, is that younger, healthier people would probably gravitate toward the cheaper basic policies, while older people with more health issues would feel compelled to buy the more comprehensive plans.
