Fixing The Health Insurance Industry Frank W. Brassell Jr. Health Insurance Reform, contrary to what politicians would have you believe, is not not rocket science. In fact it would be fairly simple. The whole problem centers on unnatural and artificial imposed conditions. These conditions always start out with positive motives; to “help” us by having the Government step in. Without fail, the Government imposes artificial conditions that end up helping a tiny segment of the population while causing a slow, unstoppable drain on the rest. If you can remove these unnatural, artificial conditions, the health insurance industry could once again start working FOR the insured. 1. Employer supplied health insurance When employers started providing health insurance, it was done to attract and keep top talent in a few highly successful businesses. This has proved counterproductive over time, because the insurance companies have seen this situation as a way to recruit large blocks of customers. Because larger numbers lower risk, the companies/employee organizations can negotiate sweetheart deals for coverage and relieve the insurers they work with of any significant competition; ie. if company A offers only a few providers, each provider can expect a predictable amount of customers from that association. The sweetheart deal is then subsidized by those who are forced to purchase individual policies with their own funds. Also, employer supplied coverage sets the bar extremely high in terms of coverage, forcing more and more demands for “comprehensive” plans that do not mirror needs. I’m not even going to go into how easy it would be (or is) for insurance companies to buy influence with healthcare decision makers in the companies. Solution: Make Everyone An Individual There’s a lot of talk about “pooling” to lower costs. The largest “pool” possible is when EVERYONE is in it. Those not qualified for a current or future “pool” are now forced to subsidize those in a “pool”. Making everyone an individual for insurance purposes negates this problem, and should over time effectively lower costs for all. This, immediately, coupled with cross state purchasing, solves the portability issue. Losing your job doesn’t lose your insurance, because it’s YOUR insurance, not your employer’s. To allow individuals to maintain their same policies, insurance companies would need to be forced to transfer current policies to the individuals, and employers would give their contributions to the employees as wages. Of course, if the employee wanted to take a lesser cost plan, that would be a valid choice. 2. Insulation of the individual from the process This is a problem in that it encourages misuse of the whole healthcare system, both in privately supplied programs and government entitlement programs. Also, in employer provided programs, that insulation from the process causes a whole cadre of “middlemen” (who add to the cost) to be created between the insurer and the insured, at least in the process of buying the policy. When problems arise, the insured is most likely on his own. Because that middleman has always been there, there is no real relationship to the insurer because the insured is not, in the eyes of the insurer, an individual, but part of a pool. Keep the pool happy, and the few that drown will be of little consequence. The insured has few options because of the small number of insurers to choose from. Solution: Again, making all of the insured into individuals This cuts out the middlemen and establishes a relationship between the insurer and the insured. Institution of moderate co-pays even on the most comprehensive plans would lessen frivolous visits. 3. Impossibility of comparison of competing health plans The artificial part about this is that each state has differing requirements, and (sadly) it is in the insurance companies’ interest to keep a simple comparison of plans impossible. Different insurance companies have wildly different policies, both compared to other providers and within their own selection of plans, making comparison shopping all but impossible. So Agents and Brokers can sell, sell, sell, giving little regard to what the customer actually needs, instead convincing people to buy policies with unnecessary features and/or holes in coverage that work in their (insurers) interest. And when someone else is buying, who is going to turn down all the bells and whistles? Conversely, if there is a hole in the coverage, you won’t discover it until it’s needed, and then it is too late. Solution: Comparable Coverage My plan requires all insurers to provide three (or 4 or 5 or?) standardized policies. By standardized, I mean that all must have a Plan A, Plan B and Plan C that are congruent to the A, B and C provided by all other insurers. In forming these policies, doctors, (NOT the AMA), hospitals, insurance companies (ALL of them) and a bipartisan group made up from the House and Senate would need to set levels of coverage for each tier based on sound medical and insurance information. The companies could price these policies as they see fit, and then effective competition would result, because a straight comparison could be done by potential purchasers. In addition, insurers could continue to provide whatever other packages as they saw fit. In other words, you would not be forced to buy a “standardized” policy. But - buyers could trust that the “standardized” policies would provide reasonable care for the price paid. So, as you shop for insurance, you could compare the prices on each of the Standardized Plans offered by any companies you choose, and either choose one of those plans or something completely different. The key is choice and competition. Without at least some standardized options, it is impossible to compare the providers. Providers could provide options on an add on (ala carte) basis that could make their policies more attractive - for instance, a company might add on eye care for an extra fee each month. Or Dental. The point is, providers could distinguish their standardized plans by add ons, and also sell other plans beyond the standardized ones. There is plenty of room for insurers to set themselves apart from others, and those that want a more “cadillac” style plan and can afford it are free to choose among a company’s other plans. And if the insurance companies balk at the standardized plans (which they should not because they would get to set whatever price they felt was appropriate), then they can find another business. 4. Pain and Suffering and Tort reform Another artificial piece to this puzzle is the necessity to have ridiculous amounts of malpractice insurance. Certainly, actual bills and provable damages should be covered, but it is not in the interest of anyone to turn a medical mistake into a lottery win. Solution: “Pain and Suffering Damages” need a reasonable FEDERAL cap. 5. Dispute resolution and fairness between insurers and patients There will always be situations where disputes occur, and the fairness of compliance with sound medical treatment is questioned. Solution: Establish a national system of regional panels to examine and arbitrate disputes and insure a fair application of standard plans. Disputes under the standard plans should be handled by an arbitration panel made up of medical experts, insurance specialists, and neutral parties. The actual makeup of such a panel needs to be carefully considered. Only after the arbitration process is completed would litigation be allowed, and then awards should be capped and limited to relevant costs. Recap This Healthcare solution would cost almost nothing in comparison to the Trillions now being squandered, would be simple to implement, and would allow the free market to set rates. Because doctors, hospitals and insurers would all have a stake in it, it stands a greater chance of success in lowering costs and consequently, premiums. With lower premiums, more citizens will be insured, no ridiculous mandates will be needed, and it gets employers and labor organizations out of the healthcare business. This action would remove a tremendous amount of waste supporting middlemen, while simplifying the selection process for the consumer.
Posted on: Thu, 31 Oct 2013 06:46:14 +0000
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