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The Wall Street Journal profiles an increasingly widely-used coverage agreements between the University of Texas Medical Branch and small businesses in the Galveston, TX area to bring affordable coverage to their employees.  The headline hails it as “Novel Approach to Health Plans Gains Traction.”  Except it’s not particularly a novel approach.  Instead it hearkens back to the very origins of health insurance, and includes some of the same trends that got us into our inadequate health care mess in the first place.

The concept seems simple enough – UTMB offers to cut out the middleman and provide care directly to small business and their employees at a greatly reduced costs.  Where an insurance plan might cost $350-400 per employee, the UTMB association costs $180, split between the employer, the worker and a foundation grant.  It sounds great but, as you might suspect, it’s extremely limited coverage.  As WSJ describes it, “The UTMB plan in Galveston pays for 20 doctor visits a year and covers maternity care, visits to the emergency room, medical imaging such as CT scans and MRIs, and surgery. Enrollees can go only to UTMB and its staff doctors, and the coverage limits are lower than those of most employer-sponsored insurance plans: $1,200 per year for drugs, for instance, and a lifetime cap of $250,000. Family members aren't covered.”  So no such thing as a family plan, a very low lifetime cap that immediately precludes coverage for cancer, say, and a threshold of doctor visits that would be sufficient for healthy people, but woefully insufficient for any serious illness or onset of a chronic disease.  And, of course, virtually no choice of doctor.  Being a hospital association deal, not insurance, it’s also exempt from the Texas state regulations on insurance – which, as you might suggest, are not exactly game-changers.  But the UTMB plan offers no mental health parity, no substance abuse coverage, no appeals process, and no financial protections – if the hospital plan goes under because of too many people are using care, or if the foundation stops funding patient enrollment, tough noogies.

I suppose it’s somewhat innovative, yet remarkably retro.  The Blue Cross Blue Shield framework for private for- and non-profit insurance grew out Hospital Associations in the 1920s and 1930s (ironically also starting in Texas).  You’d pay a low fee and get a set number of days’ coverage should you need to use the hospital for care.  It’s never entirely gone away – many hospitals give their own employees limited coverage that requires you to use the hospital or the web of providers affiliated with the hospital in order to pay in-network rates.  The UTMB plan as structured also shows the bias towards healthy customers that have become so commonplace in the private insurance industry – and the same problems.  A single, healthy employee not likely to use health care will be easily tempted into this plan.  That same person developing a major chronic condition or a frightening acute injury or heck, even just driving to Austin for the weekend will be dangerously out of coverage.

The WSJ article points out the extreme pressure small businesses are under, and it’s easy to see why limited Hospital Associations might be considered a good deal.  Eventually, you’re likely to hear this touted as a sensible free-market solution and the antidote to “excessive state regulations.”  It’s possible whoever’s doing the touting will acknowledge that it’s rationing in the extreme (20 visits, limited to the capacity of the UTMB campus???), but you know what?  I doubt it.  But it can’t be denied that what makes this cost effective is there’s such a firm cap on what care you can and cannot get.

If we really want to build a 21st century health care delivery system, the place to start is not to go back to 20th century coverage.

(Photo credit:  scruffdog1231 on Flickr.)