INSURED YET?
Well, as we all know by now, Pelosi and the gang are straining at the halter to get the reform-less reform over the finish line. As a person of some years, I would dearly love to see a change in the current, absurdly manifested ‘situation.’ You can’t call something a system that was never designed or coordinated by anyone, so situation will just have to do. And God help us if it had been designed by anyone from the federal government.
I’ve already written on my conviction that a few, enormous, multi-state insurance pools would allow comprehensive coverage at a decent price, but it seems that the embedded state laws and agencies would be a formidable obstacle to that, i.e., each state would have to want to get on board a national plan for insurance consolidation; and radical changes would have to be made in state insurance bureaucracies. Not too promising.
2nd best might be pooling between or among consortia of states, again voluntarily, and hard to tell at what point, if ever, they reach the level of participation that would constitute a risk pool large enough. Currently, by federal or state fiat, minimum levels of coverage are required of all insureds, driving up the cost of premiums, as even those who would prefer to pay a lower premium for a lower level of everyday care are forced to buy the mandated packages.
The argument heard most frequently from proponents of the “Exchange” and its companion elements in the Senate health bill is that interstate insurance purchasing is a bad idea because it’s a “race to the bottom.” In order to understand this attitude, we have to assume a high level of mandated coverage and continuance of today’s state-by-state insurance oligopolies. Thus, if you shop all those other states for coverage at a decent rate, the tendency will be for the most attractive insurance company to be one (already) in a state that decides to lowball the rates and cleverly disguise the absence of real (expensive) benefits. In other words, a combination of what we have now with our trial lawyers well-known ‘venue shopping.’
This is silly. Painting the situation in known, static terms in order to make an argument for something else avoids making a tougher decision that might actually solve the problem you say you want solved. You say you want competition, but keeping all the insurance companies in place in their respective states doesn’t really help that. They get to compete on price across state lines, if they’re inclined to play, but maintain their monopoly positions at home.
Not what I had in mind.
Real competition means they are freed from the states and compete head to head across the nation. They would be freed from any obligations other than universal access. Each company that wanted to compete nationally in the health insurance market would then offer a range of coverages. Prior to that, they would be made to understand by their regional consortium of state Governors the territory and population they would be bidding on. Their actuaries would then determine the rates over the range of proposed coverages, based on the size of the risk pool.
Each company would arrive at different combinations of coverage options and premiums. Which consortium is best could only be sorted out over time, because there is no third party who could reasonably be expected to predict their actual performance in the market place in advance. On second thought, we haven’t decided what criteria determine the ultimate winners and who is to be the judge. Big problem, with lots of unintended consequences. A specialist in catastrophic care, for instance could do well in a national market that was not available before.
If you leave the selection to politicians, you have a large and irresolvable moral hazard. Leaving it all to the open market could be chaotic for quite a while, but none of the players at that time would be allowed to engage in the bad practices of the past. Universal access, or you’re not in the game. Few health insurance companies would wish to compete for such a long-haul, uncertain prize, so you’re going to lose a lot of insurance companies and their employees, a goal of the Obama administration, anyway. The administration, although preferring single-payer or public option, gets a few highly regulated giants who provide preventative care and psychiatric and dental – all the main Democrat health reform wishes.
The difference is it stays in the hands of people who can fire employees and administer efficiently in order to keep from going out of business. There needs to be an option for policy holders to rate their service periodically to their regulators, and for the regulators, once a threshold of complaints is reached, to restart the bidding process. Would the doctors and hospitals have an incentive to discard some current wasteful practices? Would those committing fraud be more likely to be caught, and thence eliminated? We’ll cover that in another Post; but by then, Obamacare may have rendered the whole exercise moot.
