Monday, February 15, 2010

Where Do They Come Up With This Stuff?

Republicans, in particular, have been pushing to allow the sale of health insurance across state lines; this is unlikely to help much with insurance rates, except possibly briefly. New York City is a good example of what forces are at work pressuring the pricing of health insurance. When I sold health insurance in the early 1990’s an extremely comprehensive and generous major medical and hospitalization policy from a major insurance company could be purchased for less than $100 a month---if you were young and healthy. When New York instituted community rating laws that stopped companies from turning you down or charging you higher premiums because of health problems---anyone could buy a policy---but the cost doubled---and has been growing ever since. In the late 1990’s a small employer group policy that offered similar benefits cost near $300. For an individual, but the same policy cost about $90 an individual for the same client---for their office staff in Utah. The reason is Utah had less restrictions on the policy standards than NY and because health care costs were significantly lower in Utah.
If the government now allows companies to sell anywhere--- their benefits and restrictions will need to conform to the most demanding and restrictive states. Eventually the costs for those policies will rise to the average cost faced by all the other insurers serving that locale. All this will accomplish is that costs, and then rates, will rise in the cheaper states, unless they continue to restrict benefits and separate costs for those states. If they do, then there will be no benefit to this, as the costs will be raised in the expensive states and remain lower in the cheaper states---just like they are now. This is what happens now as many health insurers are serving numerous states already.
The only way to control insurance costs and medical inflation is to really reform health care. Assuring coverage for every adult and child was a start that makes the system work for everyone---but does not control costs. Mandating cost controls and lower fees by limiting what insurers and Medicare pay to service providers is not an answer. That does nothing to deal with the spiraling costs the providers endure---it just allows insurance companies and the government to pay what they want---and leaves the financial pain to the systems and people that actually provide the care! Real Reform will demand new ways to look at the system and rework how it operates. It can be done and eventually, I believe, it will be done. Selling more insurance policies across state lines is not going to do it however, and it's not going to solve any of these problems.


Bruce said...
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Bruce said...

The sale of insurance over state lines, doesn't hold much water.

But the NYTimes recently had a piece which admitted that there were some good ideas from the other side of the isle.

And President Obama has finally realized that a bi-partisan approach may yield him some progress. Had he held such a pow wow 6 - 8 months ago, we may have had real health reform already. President Obama gambled that he didn't need to bend. He then ailienated half the country with a closed process and lost his majority. Hope he learned his lesson.

LHwrites said...

I read the NY Times piece; in fact this post was originally going to be a letter to the times that ran too long. I did not see much in that article because the Times actually thought the sale across state lines could yield a benefit---and it can't, and won't. I have not seen anything credible or reasonable from the Republicans. They killed a government option, which while i did not think was a great idea, was still an idea that could have wrought some positive change. They are naysayers who keep screwing up reform, since Gingrich and the useless "contract with America" that yielded nothing but more of the same and more uninsured. The last Republican to approach reform was Nixon, and his other foibles caused his many positives to be overlooked. Since Reagan, Republicans talk the talk of the common man but walk the walk of the elitist. Gingrich weighed in a few years ago with his own reform ideas---remove insurance form employers and make everyone get their own---with government help---and let people bear the burden with the misguided idea that people will utilize health care more efficiently if they have the burden of cost. In reality, as we see countless times with people's health, they will take better care of their cars then spend money on their health---especially on the in Obama and Clinton before him handled things this way because it was the only chance of getting things done. 70% of Americans supported reform---now dwindling---because the Republicans are good at one thing--whether about reform or Iraq--fear mongering the masses into inaction.

Bruce said...

The central excellent idea coming solely from the Republican side is tort reform. Essential to any health policy shift. It will go a long way to end "defensive medicine" [ordering useless tests as legal protection].

LHwrites said...

I have been to conferences where they cover this issue. The actual cost of lawsuits, the actual percentage of lawsuits that win, are very small. I have seen first hand how the system operates, and it is actually overwhelmingly on the side of the care provider. I agree with you that the fear of this leads to wasted tests to some degree, but much of what is considered "defensive" medicine by some, might be called "good" medicine by others. If a test is necessary to rule out something--maybe it should be done. If you do not fear a lawsuit what will help motivate better practice? In the 90's, I believe it was Harvard, did a study that showed there was much more malpractice then was exposed or brought to suit, because the reality is most people do not know what kind of care they receive. I believe this is more of a smokescreen brought about by conservatives who don't like the socialistic nature of redistribution of assets that can occur from a successful suit. HOWEVER, I do believe there are areas that need improvement and either their own limits, or government oversight, or something that will need to be saved for another time. Certain specialties such as Obstetrics and Neurosurgery have onerous burdens from malpractice insurance that need to be addressed.

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