Does Washington Really Understand Health Insurance?
I have written several blogs on the subject of health insurance and efforts being made in Washington to reform healthcare. I have even advocated for regulating the health insurance industry in the effort to make it more available to the people that really need it by eliminating rejections for pre-existing conditions. Sounds like something almost everyone can agree on right? Not so fast I am afraid.
If what the country wants is private health insurance for vitually everyone, then everyone must own and pay the premiums for health insurance for their whole lives, not just when they think they need it. Allowing people to opt into health insurance policies at anytime with vitually any type of condition would simply not work. Setting insurance premiums of any kind is based on actuarial calculations of risk over long periods of time. Letting people into a policy later in life or when they get sick or injured simply is not insurance.
As I have been stating may times, if reform is going to happen, people in charge of trying to come up with some kind of plan that makes sense need to think about separating catastrophic health insurance from wellness or day to day healthcare.
The first step should be to implement a heavily regulated catastrophic health insurance plan mandated for everyone from birth on a national level that is affordable for individuals and for all employers to be able to provide their workers.
The second step, and the part that makes health insurance premiums so high priced in the first place, is to completely eliminate insurance companies from being third party administrators for payments to healthcare providers for day to day healthcare like prescriptions, office visits, routine testing etc, up to a certain dollar amount or deductible each year. A combination of a person’s ability to pay, employers self insuring for their employees and subsidized locally, for people that just can’t pay, with federal and state dollars for this deductible amount each year should drastically reduce overall costs.
The key to this type of systems ability to reduce the overall cost of healthcare would be that individuals would pay healthcare providers directly. This would encourage competetion for the day to day healthcare dollar and provide some transparency of actual healthcare costs. In todays system, insurance companies are a level of administrative costs that are not needed for day to day medical expenses and provide a convoluted system of payment to healthcare providers no one understands or likes.
As with any so called solution to the healthcare problem, this approach may run into major obstacles also, but believe strongly the concept is where we need to start over again.
Back to the drawing board Washington.