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A possible semi-public health care option

Health Care 2009

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#1 Cardie

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Posted 01 July 2009 - 10:58 PM

While I personally have no problem with a public option for healthcare, I know that it is a non-starter for many, primarily those who don't want to see the health insurance companies put out of business.  So while mulling that problem over, I came up with something.  I thought I'd share and let those of you more knowledgeable about these things show me where it falls down.

In my plan, the first thing that would happen is that an independent commission of all the major players plus economists and policy-makers not currently in public office would come up with what it feels is a fair, no-frills health insurance plan, probably one that pays for routine check-ups and prevention and provides for hospitalization and care  for serious illnesses after a reasonable deductible--something to make sure that people neither die, get care no one pays for, or are bankrupted by a catastrophic illness or accident.  There wouldn't be any price-setting, but all providers would be urged to craft one and compete over its pricing.

To be eligible to enroll in one of these plans, all one would have to do is have legal residency in a state.  You could then enroll in the health insurance plan your state provides for its workers.  Of course, you'd have to pay both your share and the employer match, but if the basic plan was an option offered by all state insurance plans--which would be free to buy it from whatever private insurer it found was giving the best deal--that cost might not be prohibitive.  There could be some sort of formula to determine if the feds might subsidize part of its cost for those who have no job.  Those employed by larger businesses who don't qualify for that employer's plan or whose employer doesn't provide health insurance could receive a modest health stipend from the employer instead. (The Dems' employer-mandate plan asks for $750 per worker to opt out of providing coverage.)

The one big danger is that  the bettersorts of policies states now offer might be scaled back, but I can see more coverage for more premiums still being attractive to better paid workers, and perhaps there could be tax write-offs for the expense of more comprehensive plans.

I just can't imagine the insurance industry not being willing to lower premium costs when a substantial proportion of people in the country would look to competitors if they didn't.

Thoughts?

Cardie
Nothing succeeds like excess.

#2 Aric

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Posted 02 July 2009 - 03:09 AM

Hi Cardie.  Since I've no experience with studying, purchasing, or using US health care, I'm probably not best suited to offer my thoughts, but I'll give it a try.  I am a bit unclear in some areas, but overall I'd say your proposal, while interesting, would inevitably fall victim to the existing distortions, and it would not ultimately solve the critical long term problems within the US health care system.  If you'll indulge me, I'll ask some questions, and offer my thoughts.

Even within the confines of your definition, Cardie, I think your committee would still have a difficult time agreeing on what constitutes a fair, no-frills package.  Assuming they eventually do, and if I'm understanding you correctly, you want the committee to develop a template base reasonably comprehensive insurance plan, and have private insurance companies offer this service to all residents of a state?  I'm unclear on the whole state employee part, is that a function of how one signs up for health insurance?  Is this to mandate universality?  Perhaps my unfamiliarity with the actual mechanics of how to enroll in health insurance causes my confusion.  I'm also unsure as to how is this is to be any different from existing insurance plans?  As in, don't insurers currently offer such plans?  And further to that same point, don't insurers already compete in the market?  As well, will insurers be mandated to offer coverage, regardless or pre-existance?  And even if they're mandated to offer coverage to all, what would compell them to abandon the impractical but wildly profitable '5 month hospital stay covered but no medical test or treatment covered while you're there' plan in exchange for the far more expensive and less profitable reasonably comprehensive plan the committee designs?

I'm afraid Cardie I just don't see how this plan will assist in long term cost sustainability.  Even if your proposal results in universal coverage, which I don't think is likely without mandating it, one of the biggest advantages of a public option modelled on Medicare is the pricing power and cost control strength an entity like that commands.  While it's certainly worthwhile to have price competition on the insurance side, these plans are sure to be unattractive lower margin plans for the insurers, and price competition will not last, even if there's mandated coverage, as exclusions will start to tear away at the comprehensiveness of the plans in no time, since for profit companies aren't going to make money competiting for business from money losing clients.  Individual insurance companies don't have the power to force down the cost of treatments from hospitals, so cost growth on the hospital side will continue.  And without those costs under control, the long term viability of the health care system remains at risk, as insurance companies continue to have to raise premiums and limit/deny claims/coverage to satisfy ever increasing hospital costs and profit considerations from their shareholders.

Sorry if I misunderstood you on anything!!

Aric

#3 Cardie

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Posted 02 July 2009 - 11:16 AM

There are two issues that motivated my thinking (although, like you, I think a government plan works best.)  But the prospect of being excluded from insuring most people has the insurance companies in such a panic that they may be able to deploy their lobbying to defeat a public plan.  The second problem with keeping insurance private is that premium rates remain very high and exclusions run rampant when individuals try to purchase health insurance.  However, if the insurance is being purchased by an employer with a large number of employees, this evens out.

All states employ workers and offer them health insurance on their jobs.  States aren't likely to go out of business.  Thus my plan would use the favorable purchasing power of the large number of state employees to expand the pool to include an even larger number of uninsured state residents.  I am a state employee and have had good, reasonably priced health insurance my whole career.

Yes, I am assuming that employers will be mandated either to offer coverage or to contribute a certain amount per employee to pay for any government subsidies of the uninsured.

Cardie
Nothing succeeds like excess.

#4 Aric

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Posted 02 July 2009 - 06:42 PM

Thanks for the clarification, Cardie, I didn't realise or understand what benefit it would create, but now I definitely see what benefit pooling the uninsured with a large number of people to bargain for health insurance.

I remain somewhat unclear about another thing, are all state employees given the exact same plan, with the exact same premium, or is there the possibility of substantial difference?  I ask this because in Canada, if a province wants to introduce a health care premium, it's usually in the form of a standard amount owing from all insured residents, with exceptions and premium reductions as the case may be, but it's not tied to an individual's personal health status, so if I had to pay $200 a year, as a healthy person, someone else similar to me but with pre-existing illness or condition would pay the same amount.  The implication to this is that cost to a person who falls ill and requires expensive treatments won't start to see premiums spiral out of hand, or start to see disallowed items or exceptions on his insurance coverage.

Also, does a large employer like a state choose only one insurer?  If only one insurer could have all state employees, plus the uninsured, I think the state could then exert a considerable amount of control over the quality and effectiveness of the plans it purchases from the insurer, at pain of losing such a massive client.

I clearly misjudged the possible effectiveness of your plan, Cardie, I think as substitutes for public insurance options go, a mandated requirement by states for insurers to provide loophole-free comprehensive and reasonably priced insurance coverage to cover these currently uninsured people, and combining them with the large existing state employee pool, would be a good one, and a significant improvement over the current state of affairs.  While it would have some strong pricing power on the insurance premium side, it would not, though, be enough on its own, since the cost control on the hospital side would still need to be addressed.  As well, I would suggest the ability for one who feels they are currently underinsured to be able to opt out of whatever plan a person currently has to be able to enroll into this plan.

Aric

#5 Cardie

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Posted 02 July 2009 - 10:30 PM

Like any employer, a state government chooses the insurance company and type of plan or plans it offers, so there's no one answer for that.  My own plan allows a number of choices, including between HMOs or a standard package from Blue Cross (which I have.)  And as long as you are a state employee, a member of the pool, you pay the same as everyone else for the same coverage.  As a single person, I have had a real bargain on health care under my state's plan. Of course, like any insurer, Blue Cross will refuse to pay for certain treatments it deems experimental or not medically necessary.  But as long as you work for the state, they can't drop you. The state has recently added a surcharge if you or someone in your household smokes, and a provision to do the same in cases of obesity was also proposed, but defeated by the legislature.

The AMA has recently bvacked the idea of pool;ing the uninsured into the private insurance plans offered to all Federal employees, which would trump my idea by being the same for everyone in the US.

My ideas only applied to the problem of creating a big enough pool for the uninsured if there was not simply a public option to solve that part of the equation.  It wasn't meant to address rising costs, etc.

Cardie
Nothing succeeds like excess.

#6 Aric

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Posted 03 July 2009 - 02:07 AM

I definitely agree, then, Cardie, that with the objective of achieving universality without a public option, the idea to mandate coverage and pooling the uninsured with state or federal employees is a very good idea.  There is definite advantages to being in a large pool, and I can see how this would offer considerable improvement in the system, by achieving the specific objective of universal coverage.

Indeed, there's so much more to the public option than just universality, and I think if Obama is willing to trade away a public option in exchange for this format, he'll have to get several significant concessions from the insurance companies on how they insure people to prevent underinsurance, premiums jumping exponentially, rejecting claims/expenses, etc.  I think in the end, any reforms that don't implement a public option, one not governed by profit, will ultimately fail, as distortions that may be reduced in the short term with universality will inevitably reappear over time.

Aric



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