Pat McCrory’s risky and inadequate health care proposal

In an election year about change, gubernatorial candidate Pat McCrory wants to sell you on a radical new health care system for the state.

Unfortunately, his proposals will lead to more North Carolinians joining the ranks of the underinsured and will sharpen the financial insecurity of middle class families.

There are many disturbing provisions in McCrory’s plan, but perhaps the most troubling is his attack on the guarantee that all health insurance products sold in the state cover basic services.

It is important to understand the implications of McCrory’s policy proposal because it seems to make sense at first blush. We’ll come back to the specifics of his proposal, but first let’s explore a few points about insurance.

Currently, health insurance plans sold in North Carolina must meet certain minimum standards required by the state and federal governments. All plans, for example, must allow a woman to stay in the hospital for at least 48 hours after giving birth. Some basic care for newborns is also guaranteed.

There are several reasons why these minimum standards exist. It’s in our collective interest that when we get insurance on the individual market or from a small or mid-size business that it cover necessary care. No one wants to pay insurance premiums only to find out that widely recommended screenings for breast and colorectal cancer are not covered.

It is also critical to all of us that insurance plans cover services like diabetes management. Otherwise, patients will end up in the emergency room saddled with enormous bills. We all pay for that through crowded emergency rooms and larger premiums.

What, then, is Pat McCrory’s proposal? Campaign spokeswoman Amy Auth explained to me in an email that McCrory does not think that it should be up to the state to decide which services are covered by insurance. She continues: “Individuals should have the option of taking comprehensive care or a less expensive option.”

In other words, McCrory would allow insurance companies to sell health plans that do not meet the minimum standards currently in place. The theory McCrory is pushing is that insurance companies could sell cheaper policies that do not include “luxuries” such as hospital care for pregnant women. With less expensive options available more people could then buy health insurance.

But there are several problems with this argument. There is little evidence that minimum standards add much to the price of insurance. A recent Massachusetts study concluded that the net cost of standards adds about three to four percent to the cost of premiums.

Without a basic package of guaranteed benefits North Carolinians could buy slightly cheaper coverage only to find out when tragedy strikes that nothing is covered by the plan.

One major consequence of McCrory’s proposal is that it will increase the number of underinsured in our state. The Commonwealth Fund, a national health care foundation, says that in 2007 nearly 25 million Americans had insurance that required high deductibles and did not cover enough services. The middle class gets squeezed the most by inadequate coverage, the organization says, putting families deeper in debt during difficult economic times.

McCrory will argue that insurance standards are like requiring that all cars be sold with unnecessary additions: leather seats, fancy sound systems and DVD players.

But in reality, what the state requires is that all health plans meet basic standards. It’s more like buying a car and then finding out that it doesn’t have brakes when you need to stop. And unlike cars, health care costs are spread across the entire population. So when someone crashes, we all pay.

McCrory is traveling the state speaking as smoothly as a used car salesman about a menu of health insurance options under his plan. Just make sure that you don’t buy what he’s selling, or we will all end up with a lemon of a health care system.

Adam Linker is a Policy Analyst at the N.C. Health Access Coalition