March 23, 2010

Swiping your ATM card in the ambulance

This post is inspired by the already burgeoning cottage industry of gaming the new health care bill. I've been a lawyer for over three decades, and one thing I've learned is that one of the reasons that lawyers become legislators is that they can't hack the legal field because (a) they can't think clearly and (b) they don't like hard work. I have deduced this hard-won lesson from reading thousands of legislative enactments under conditions where I positively must make sense of what has been written by some blowhard in the state house or in Congress (or more likely, by the lobbyist who wrote it for said blowhard).

Anyway, Karl Denninger at the The Market Ticker thought one way to play the new law ("America's Affordable Health Choices Act of 2009" - uber-clunky) is to forgo any coverage and wait till you need insurance; that is, when you become ill. (Can't get a lot more "affordable" than that.) Since an insurer cannot deny coverage on the basis of a preexisting condition under this new law, the simple solution is to save, every year, the ten grand you were going to throw away on insurance and wait till you need it. All routine medical costs could be paid with cash (which usually add up to less than a standard deductible anyway). The government's fine for not carrying insurance is much less (on the order of 1/5th) than the cost of buying insurance you don't really need (until you do need it) The fine is 2% of AGI; if you make $100,000 as adjusted gross income, the $2,000 fine is only 20% of what you were going to throw away on Humana.

Inspired idea, I thought. It could give rise to a new business paradigm as well: the ambulance or EMT wagon equipped with a credit card terminal so you can buy insurance on the fly, as they speed you to the emergency room. Also steady work for lawyers, because everyone playing this game should have a power of attorney drawn up designating someone to buy the insurance for you in the event your myocardial infarction leaves you temporarily in non-business mode. Just think of it: there you are in the oncologist's office, inhaling deeply on your Marlboro as the doc gives you the bad news from the MRI. He asks if you have insurance, and you casually answer no, not right now. But can I use your phone? Lung cancer, as a preexisting condition, might only have existed for a couple of minutes, but in the old days you would have been on your own. Now you phone up and demand insurance from any insurer you like to cover the few hundred grand your surgery, chemo and radiation are going to set the insurer back. The premiums don't bother you because you've saved fifty thousand large over the last five years going without insurance. (You spent a lot of the savings on cigarettes and booze, in fact.)

Can it really be that easy? I looked the statutory section up:


    A qualified health benefits plan may not impose any preexisting condition exclusion (as defined in section 2701(b)(1)(A) of the Public Health Service Act) or otherwise impose any limit or condition on the coverage under the plan with respect to an individual or dependent based on any health status-related factors (as defined in section 2791(d)(9) of the Public Health Service Act) in relation to the individual or dependent.

Ah shit, here we go. This is what I hate about these statutes. They're so damn lazy they refuse to just put everything you need to know in one place. You can see right away this is not going to be so easy. It starts right off with the words "qualified health benefits plan" which strongly suggests you're going to have to read the definitions to find out if that's the same thing as an "insurance policy" in our quixotic fantasy about the guy in the ambulance. But what's worse is that you've got to look up something called the Public Health Service Act to find out what a "preexisting condition exclusion" is and what a "health status-related factor" is.

Am I willing to do that? No. Too much damn work, and useless, because it would be folly to attempt living without insurance until 2014, when this provision finally kicks in for adults. Between then and now there will be many test cases for children, who will benefit from the liberalized laws immediately, and an anguished cry from the insurance industry will rise up over this great land as they write, not an insurance policy, but a simple agreement to accept huge debts where the "insured event" is a 100% probability, having already occurred prior to issuance of the policy.

Surely there must be more to it than this. The ATM terminal in the cardiac wagon is supposed to be a kind of burlesque, a joke, not a test question on the bar exam. Yet I think that's the way things, as written, would play out. (I cheated a little, by the way. I read the Public Health Service Act, the relevant sections, and I didn't see anything there which changes the story. That law was written in 1944 and has been amended a few million times so it's hard to follow, but the basic premise seems to hold together. The only caveat is that the insurer is not required to cover an illness or condition which they don't cover anyway, as a general rule, so that if your preexisting condition is something which they always don't cover, then the new law does not compel them to cover it. For example, if the insurer in question does not cover cosmetic surgery, then you, in your uninsured condition, suddenly deciding you want a nose like Demi Moore, could not require your new insurer to pay for the guy with the rubber mallet.)

Anway, something to think about, for those of you who like to play games with Congress's poorly conceived and incompetently structured enactments. And who doesn't like to do that? I don't have anything against health care reform, by the way. It's obviously desperately needed. But I think this particular "discontinuity" between the private sector and public health is going to cause massive litigation, amendments, et cetera, and it's all because the Democratic Congress tried to appease capitalists while selling a pig in a poke to their "liberal" base (giving us a "choice" about which private insurer will get our money). Having refused to do the right thing, they're now attempting an absurd thing.

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