Insured, but medically bankrupt

Two developments on the health-care front: The NYT has a story about “limited-coverage” medical policies, which provide “peace of mind” and damned little else. The Times also reports that Wal-Mart has endorsed an employer mandate.

The more the health care debate is over the details of the new plan, the better things are for the obstructionists. The more the debate is over how terrible things are right now, the better things are for the reformers.

The NYT is doing a series on how terrible things are right now; Tuesday’s installment is about a guy who went bankrupt because his health insurance policy, which on its face claimed to cover hospital charges up to $150,000, actually only covered room & board plus $10k.

At St. David’s Medical Center in Austin, where he went for two separate heart procedures last year, the hospital’s admitting office looked at Mr. Yurdin’s coverage and talked to Aetna. St. David’s estimated that his share of the payments would be only a few thousand dollars per procedure.

He and the hospital say they were surprised to eventually learn that the $150,000 hospital coverage in the Aetna policy was mainly for room and board. Coverage was capped at $10,000 for “other hospital services,” which turned out to include nearly all routine hospital care — the expenses incurred in the operating room, for example, and the cost of any medication he received.

In other words, Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months — as long as he did not need an operation or any lab tests or drugs while he was there.

All the health-insurance-industry flacks quoted in the piece keep saying how much better things will get after health care reform. Of course, they’re going to be in there pitching to make sure that the reform is as good for them, and as bad for their customers, as possible, but at the end of the day when the Senate has to vote on cloture, stories like this are going to make getting that sixtieth vote a little bit easier.

Meanwhile, Wal-Mart now supports mandatory employer-provided coverage. That’s not the first crack in corporate opposition to the Obama Administration, but it’s a big crack.

The biggest miscalculation made by the Clinton health care team was their bet that corporate executives would act out of corporate self-interest rather than class solidarity. If GM and Chrysler execs, and the execs of the other rustbelt companies with big legacy health-care costs, had acted in the interest of their shareholders and employees rather than in the interests of their business-school classmates and fellow high-bracket taxpayers, those two firms might not be bankrupt today, and we’d have a halfway-civilized health care finance system.

Maybe Wal-Mart has learned their lesson.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com