Cruelty: Insurers Block Hospital and Charity Efforts to Pay Premiums in Bid to Protect Profits

It's no secret that the subsidies for low-income individuals purchasing Affordable Care Act (ACA) coverage in the marketplaces are too low. Well, charities -- and hospitals (fearing cuts in government payments to help when the uninsured can't pay their bills) -- have noticed and are trying to do something about it:

A charity's plan to help people pay for coverage through new health-care exchanges has put it at the center of a high-stakes fight between the insurance and hospital industries that could pose a challenge to the economic underpinnings of President Barack Obama's health law.

A Better LA, a decade-old Los Angeles nonprofit, said last week it was signing up 50 low-income people for health plans in California's health-insurance marketplace. The charity, which said it has the blessing of the state agency overseeing the marketplace, will pay $50 to $100 a month to cover the share of the people's premiums not already financed by federal subsidies.

Those 50 people are at the vanguard of a push that could shift the balance between hospitals and insurers across the nation. Nonprofits, including some hospitals, say paying premiums would ensure coverage for people currently uninsured who can't afford even a small monthly payment for health insurance.

In the world of corporate, big-profit insurance, however, no deed goes unpunished and insurers are pushing back, fearful that those being helped by this charity may be sicker than others who are unable to afford insurance:

But insurers say they can't make a profit unless the health-insurance exchanges created by the Affordable Care Act draw a balanced mix of healthy and sicker customers. The law's rocky start, many insurers fear, has already skewed the mix toward people in worse health. Help from nonprofits or hospitals could speed the arrival of less healthy customers into the exchanges, outpacing the arrival of younger, healthier people who might not cross paths with hospitals.

Here, again, we see the brutality of the private health insurance industry, one that puts its own profits ahead of expanding coverage and access to health care for low-income Americans. The folks set to receive help from charity have few other options; indeed, some are already struggling to pay off existing medical debt:

One person set to get help from A Better LA is Renee Reaser, a 50-year-old in Lancaster, Calif. She has been uninsured since 2009 and has a monthly income of around $600 from running a community group teaching life skills to at-risk girls. Her husband, who also runs a community group, earns a little more, putting them slightly above the federal poverty level and making them eligible for tax credits to cover most of her premiums.

Ms. Reaser said she likely still couldn't afford her share of the premiums, in part because she is still paying off $1,900 in hospital bills after two emergency-room visits last year—for an asthma attack and what she was told was a mild stroke.

Rowan Vansleve, the charity's chief executive officer, said the initiative came from a donor who watched news reports on the health law and was struck by how little it would cost to pay some people's premiums.

In case you're wondering, this is perfectly legal according to the Covered California (California's marketplace):

A spokesman for Covered California, the state exchange, said the state didn't bar third-party payments, but that individuals should ask their own lawyers if the payment would violate any other statute or code.

At the moment, however, the Federal Government is suggesting it will try and block this practice, which is incredibly unfortunate, given that these charities are meeting a real need for patients and their payments will help ensure that actual providers (versus rent-seeking insurers) aren't left unable to cover their costs:

The federal government has provided apparently contradictory guidance. In late October, Health and Human Services Secretary Kathleen Sebelius wrote a letter to a congressman stating that she didn't consider plans sold through the insurance exchanges to be federal health-care programs, and so weren't subject to rules that prevent health providers from giving subsidies or rebates to enrollees.

But less than a week later, an HHS unit that is implementing the health law said it would "discourage" hospitals and other commercial entities from paying premiums. It asked insurers to reject such payments and warned that it would take further action if necessary.

"HHS has significant concerns with this practice, because it could skew the insurance risk pool and create an unlevel field," said the guidance issued Nov. 4. An HHS spokesman declined to comment further.

Nevertheless, some non-profit hospitals in states not expanding Medicaid that are expected to feel the most pain from GOP-led efforts to disrupt the ACA are still considering how they can help more folks get insured:

Brian Massey, vice president for strategy at St. Vincent's Health System in Birmingham, Ala., an outpost of the Catholic nonprofit chain Ascension Health, said it was interested in paying premiums for people with incomes that fall below the level needed to secure federal subsidies. Under the law, the lowest earners were expected to enroll in Medicaid, the joint federal-state program for the poor, but Alabama chose not to expand its version.

The Tennessee Hospital Association said it was eyeing whether to create its own foundation to help its members do the same. "We're trying to work our way through that morass," said Craig Becker, president of the group. "We'd probably put some money up, and so would the hospitals, if we figure out we can swing it."

While I'm the last person to defend the interests of hospitals with a propensity for overcharging patients and setting insane prices with zero transparency, the reality is that on a meta level, this is a huge win for progressives: more individuals get covered at zero cost to taxpayers and corporate insurers are cast as villains (which they really are in this case) attempting to block access to quality health care for deserving Americans. Moreover, that the ACA is still a system in which insurers have an incentive to deny health care to sick people, which this whole conflict reveals, furthers progressive arguments for moving beyond the ACA to Medicare for all.