One-Sentence Health Insurance Reform

"Any health insurance provider must offer to any individual, on the same terms and rates, any policy of insurance that it offers to any other individual or group, and no such policy may exclude coverage of any pre-existing condition." 

Period.  End of bill.  You might call this a "Most Favored Nation" clause, modeled after the WTO trade rules.  It sounds fair, and isn't a thousand pages long, so it offers minimum purchase for demagogy.  

That provision, standing alone, resolves the problem of individuals being unable to find decent  health insurance at reasonable rates, and the related problem of people being bound to a job by their health coverage.   

It doesn't resolve other problems that ought to be addressed:  cost containment and the fact that people with ordinary incomes can't afford even honestly-priced health insurance.

It also worsens the adverse selection problem:  if you're young and healthy, your best bet is to "go naked" and buy insurance only when you actually get sick.  The result will be to somewhat increase the price of group health insurance (only partly offset by the virtual abolition of the "unpaid care account" under which hospitals figure into the rates they charge insurers a portion of the cost of the care they deliver to the uninsured).  To a policy analyst, that looks like a tax on group health insurance to subsidize individual health insurance.  But to a voter, it doesn't look like a tax at all, and when insurance rates go up Democrats can hold hearings into insurance-executive pay.

Now you could fix the adverse selection problem with an individual mandate.  But that would create a crushing burden on middle-income families whose employers don't pay for part of their insurance.  To fix that problem you'd need a subsidy.  To pay for a subsidy you'd need a tax increase.  To keep the cost of all that down to some reasonable level you'd need cost-containment measures.  And now you're back to a thousand-page bill, which the teabaggers can pretend includes "death panels."

If the health insurance companies don't like what this does to their business model, or the employers who now provide health insurance don't like seeing their rates go up, all they have to do is muscle enough of their tame Republican senators to vote cloture on a more comprehensive bill.   If not, "Most Favored Nation" wouldn't be a terrible outcome, and would be a popular one. 

"Any health insurance provider must offer to any individual, on the same terms and rates, any policy of insurance that it offers to any other individual or group, and no such policy may exclude coverage of any pre-existing condition." 

Period.  End of bill.  You might call this a "Most Favored Nation" clause, modeled after the WTO trade rules.  It sounds fair, and isn't a thousand pages long, so it offers minimum purchase for demagogy.  

That provision, standing alone, resolves the problem of individuals being unable to find decent  health insurance at reasonable rates, and the related problem of people being bound to a job by their health coverage.   

It doesn't resolve other problems that ought to be addressed:  cost containment and the fact that people with ordinary incomes can't afford even honestly-priced health insurance.

It also worsens the adverse selection problem:  if you're young and healthy, your best bet is to "go naked" and buy insurance only when you actually get sick.  The result will be to somewhat increase the price of group health insurance (only partly offset by the virtual aboliton of the "unpaid care account" under which hospitals figure into the rates they charge insurers a portion of the cost of the care they deliver to the uninsured).  To a policy analyst, that looks like a tax on group health insurance to subsidize individual health insurance.  But to a voter, it doesn't look like a tax at all, and when insurance rates go up Democrats can hold hearings into insurance-executive pay.

Now, you could fix the adverse selection problem with an individual mandate.  But that would create a crushing burden on middle-income families whose employers don't pay for part of their insurance.  To fix that problem you'd need a subsidy.  To pay for a subsidy you'd need a tax increase.  To keep the cost of all that down to some reasonable level you'd need cost-containment measures.  And now you're back to a thousand-page bill, which the teabaggers can pretend includes "death panels."

If the health insurance companies don't like what this does to their business model, or the employers who now provide health insurance don't like seeing their rates go up, all they have to do is muscle enough of their tame Republican senators to vote cloture on a more comprehensive bill.   If not, "Most Favored Nation" wouldn't be a terrible outcome, and would be a popular one. 

Follow Mark Kleiman on Twitter: www.twitter.com/markarkleiman

Comments

[JB42]

Cheers Mr. Philclock.­...
Maybe we should address the specific problems and not amputate the leg to fix a toe? I suggest people 1st take some responsibility i.e. stop with all the expensive drugs and manage their own healthcare responsibly. Start by switching to generic drugs (when available) then educate oneself about Individual Health Insurance plans available in their area. www.insurance-wholesalers.com/Healthcare.html or Health Insurance Plans www.insurance-wholesalers.com/AetnaHealthInsurance.html are two excellent resources. Collectively we need to target specific areas for improvement. Technology infrastructure is the only place to start. We can gain efficiency and squeeze out overhead for the entire industry. We should really attempt nothing until that is accomplished.
We don’t need a complete overhaul and we certainly don't need all the government intrusion into commerce. This is anti-American and goes completely against the original design of our once great country. Starting, managing, and operating a business if far more difficult than the legal or congressional career.
I have some other keys points which I have outlined for brevity 1) Control Healthcare Inflation 2) Minimize provider loss, 3) Reduce Insurance premiums 4) Provide catastrophic coverage for every American 5) Create an environment of affordable, manageable health delivery 6) No Added Cost to Taxpayers. I hope WE can get there from here. I discussed the six points in detail at www.articlesbase.com/health-articles/a-viable-healthcare-solution-1153246.html
I’m no blogger just an interested and concerned citizen.

[Philclock]

That's my main point...IF PEOPLE ARE ALLOWED TO MANAGE THEIR OWN HEALTHCARE, IE PAY CASH FOR WHAT THEY WANT, GUESS WHAT? IT'S THEIR MONEY, THEY'LL ACT IN THEIR OWN SELF-INTEREST, BID FOR AND GET WHAT THEY WANT, USUALLY RESPONSIBLY! If the Government mandates most everything (as it does now), people are spending someone else's money, so guess what? They'll look at health care as a blank check.

Duh! Just Common Sense. Even Democrats get this, although they're too wrapped up in their lefty fix for everything, Central Planning and Rule by Committee, to admit it, so they acknowledge the problem and propose more Big Government instead of patient power.

[Philclock]

Mr. Kleiman:

What is it that you don't get about insurance? IT'S A FINANCIAL INSTRUMENT ONLY! INSURANCE COMPANIES INSURE RISK! The big problem? Big Government intrusion! Government mandates much of what insurance companies cover, government mandates the medical industry by MANDATING REIMBURSEMENTS, AND MAKING IT ILLEGAL TO TAKE PRIVATE PAYMENTS! Government also mandates that INSURANCE COMPANIES CANNOT OPERATE FREELY ACROSS STATE LINES!

Government is the problem. If all these mandates & regulations were in the food industry, we'd have high prices, different prices in each state, continual shortages and grocery stores getting out of the business because they're told what to do and can't either cover overhead or make a profit.

Does the word "monopoly" ever come to mind when government's involved running things? Bet you'd be on your high horse about Microsoft if it ran health care like the government.

[BassMonk]

Why do we need insurance companies involved in healthcare?

[Philclock]

We don't for ordinary care, pay cash instead. Set up medical savings accounts, tax-free, subsidized if you're needy, spend it when you need health care. Insurance comes in handy for CATASTROPHIC CARE, ie, cancer, chronic diseases like diabetes, long-term care, etc.; best strategy is buy it with big deductible, when you use it deductible paid from Medical Savings account. Common sense, n'este-ce pas?

[BLBass]

This is something to pass -- how could it possibly be defeated? -- only after real reform has failed. It is not a fallback alternative, but a stopgap measure. It separates the question of access from the real structural reforms that will make the system work better. That's not even a bad thing, and it might make the next crack at reform a little easier. But if we address it first we will lose any momentum toward the structural fixes until after the '10 election, and that's not an acceptable trade-off. If we first lose a real bill, and progressives are forced to defeat the R[eform]INO that comes out of conference committee, this stopgap must be put in place before restarting the debate -- but then that debate must pick right back up, putting a vote on the next reform effort in spring/fall '10. This would be far less pleasant for the weasly within Congress who hate being put on the spot for actual votes during election campaigns, but that's the price of holding up the change America believed in and thought we voted for.

[several]

Um, there's nothing in that sentence that says they must pay claims. So, how would that sentence help put a stop to this: http://www.huffingtonpost.com/jamie-court/pacificares-kill-rate-40_b_275801.html