2010-03-24

Health care reform options not accounted for in ObamaCare - Part 1 - Portability of Insurance

Obama's much touted health care plan was finally pushed into law against the will of the people .  The main talking points in support of this health care plan were:  Universal coverage, increased competition,  and coverage for pre-existing conditions.  However, ObamaCare missed the mark when it came to the "real" reason that health care is unaffordable and that pertains to the high cost of medical care.

Without getting into the legal and constitutional challenges that threaten this health care bill, it's time we looked at the options that will actually address the main cause contributing to lack of medial coverage for a small population of the US and that is the rising costs of such medical coverage.  First off, to make myself clear, ObamaCare does nothing to lower medical cost, it instead mandates that all people must purchase health care insurance and then helps subsidize a small fraction of the population deemed unable to buy on their own, but doesn't forcing the purchasing of coverage make things harder on everyone, including individuals and businesses?  If you couldn't afford health coverage to begin with, how will the new bill help with that without lowering the costs associated?  In my view, it doesn't and we are missing a real opportunity to enact "real" health care reform to fix the issue of rising cost. 

Due to the sheer magnitude of the options available and the amount of time necessary to explain them, I will publish one option at a time with information to support.  This way, it becomes much more readable and useful.  :)

Portability of Health Insurance

One of the main talking points of ObamaCare is that it would increase competition and drive down insurance costs, however, this is precisely an area that the government had forbidden such competition.  Thru unintended consequences of the McCarran-Ferguson Act of 1945, the regulation of health care insurance was left to the states.  The consequence of this was that it lent itself to an anti-trust exemption within each state.   Only insurance companies licensed in the state are able to operate within the state leading to no measure of price protection or real competition to drive the price of premiums down.

With the above, coupled with widely varying state regulations, we now have an atmosphere of "privatized socialism" in which some states, seeking to create a localized, universal health care system, causing state insurance agencies to drive premiums higher to provide coverage for generalized coverage not conducive to the public needs.  For example, in states like California or New York, regulation states that the insurance provider must provide coverage for podiatry, chiropractic care, pregnancy assistance, etc.  All of these conditions serve to raise premiums, but why should a 25 year old man pay for health insurance covering pregnancy costs when it's physically impossible for him to ever use the benefit?  Why should an individual who does not believe in Chiropractic care pay for a policy that covers such care when they will never use it?  The reason is that within these states, the cost of such services are enacted upon all to help pay for those that can not, I.E., "privatized socialism".  This is described by a statement from the National Center of Policy Analysis as such:

The cost of individual health insurance varies widely from state to state.  In a January 2006 report, The Commonwealth Fund compared the prices of individual health insurance policies in seven states with varying degrees of regulation.  The price of policies varied tremendously, due mainly to state regulations rather than variation in health care costs.

research illustrates how regulations can impact the insurance market.  But it is no accident — rather it is by design.  In states where health insurance costs are the highest, a portion of the premiums paid is being used to cross-subsidize the premiums of high-risk individuals.

By providing the ability of people to shop for insurance across state lines, you enable people the ability to chose a policy that best fits their own specific circumstances.  In a 2007 study by Center for Policy and Research, it was found that the average annual policy premium for single coverage was $8,537 in Massachusetts vs $1,254 in Wisconsin ($16,897 vs $3,087 for families, Tables 3 & 4).  Now, in looking at that, what do you think would make health care insurance more affordable?  Many people unable to afford insurance in Massachusetts could most likely afford a policy from Wisconsin, even if they had to supplement that insurance for specific needs.  This sounds like true reform to me!

In addition, by promoting nationwide competition, market forces will allow those companies that under perform or abuse clients to be weeded out.  With a national pool of providers, if a customer is unsatisfied with their insurance company, they could simply change policies, an option not available within a heavily regulated, carrier deficit state.  As companies compete, those policies with the best service, best care, best price will rise to the top via people participating, while those who are not, will lose clients and drop out of the industry.  Market force is how most all business is done with the US, why should it be any different in this industry?  John Goodman, writer for HealthAffairs.org, stated it best in his article, when he made reference to car insurance commercials like Allstate, stating "You are in good hands with Allstate".  Have you ever heard such a statement from a health insurance company?  No, because there is no competition for your hard earned dollars.  Unless we can get to a position of de-regulation and true competition among providers, there is no incentive, nor avenue, for these companies to try and earn your business.

Another benefit of opening up competition across state lines (nationally), there is now an option for insurance carriers to provide specific, customer focused policies that can cover specific areas of the population based on risk and health.  I.E., if you are fit, reasonably healthy,non-smoking  individual that goes to the gym 2-3 times per week, you are at much lower risk than other within your age group.  Opening up the realm of cross-state health insurance coverage would allow coverage's just for that demographic.  You would not be required to subsidize those that do not abide by the same lifestyle as yourself, but instead would be in a pool that is more representative of your circumstances, thus lowering cost of premiums.

In the end, it allows consumer choice and control in their health care decisions.  It allows people to find the coverage that is best and appropriate for them rather than being locked into a regulatory state that may not have their best interests considered.  ObamaCare is built off a "one size fits all" approach by requiring all people to buy coverage, but does nothing to try and address individual needs within that coverage.  In this respect, it is driving a push for even more "privatized socialism" by forcing many to endure costs to help cover those few who cannot.  In this manner, the only way to create "equality" in coverage is to lower all participants down to the lowest common denominator.  It would seem logical that if we could reduce the burden of cost, then we would open the industry up for the inclusion of more people.  According to a study by the University of Minnesota, enacting this kind of interstate purchasing would enable 12 million additional Americans to afford coverage.  The conclusion of that study stated that by allowing policies with fewer benefit mandates (interstate purchase), health care is made more affordable for a larger portion of the American population. 

So using the number of 47M uninsured often touted by the Obama Administration using statistics from the Census Bureau, let see how this simple change would affect the "crisis" we are now in.

  • 10 million are illegal or non-citizens bringing the number down to 37M
  • According to the Congressional Budget Office, 45% (16.6 M) will have insurance within four months due to job transition leading CBO Director Douglas Holtz-Eakin to state that 40+M Americans lacking insurance is "an incomplete and potentially misleading picture of the uninsured population.  New number:  20.4M
  • 8M are under the age of 18 and qualify for public programs, but their parents have not signed them up.  New Number: 12.4

So, by breaking down those numbers and assuming that the University of Minnesota's study was correct, then by opening up interstate policy purchasing, we almost completely wipe out the uninsured population!  Seems to be a compelling argument for such a reform doesn't it?  It certainly sounds better than handing over 1/6th of our economy over to the government to "manage" to me.  Couple this with other options, I think we may be on to a process of true reform that allows coverage, medical care, and keeps the government out of our private lives.

Stay tuned for the next installment where we will talk about tax code adjustments and health savings accounts.

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2 comments:

Dr. Ross Carter said...

Chiropractic treatment is one of the best methods for treating numerous health problems naturally. After years of experience being a chiropractor, I have found that it is a powerful way to solve many non-pain condition as well, such as fatigue, sleep problems, and sinus problems.
Chiropractor Dacula

Rednex said...

Dr. Carter,

Welcome to the site. My comment above was not a judgment on chiropractic, but merely a question regarding why a person who did not believe in chiropractic should be forced to join an insurance plan that includes it. Likewise, a person who believes in chiropractic should be able to insist that his/her policy is inclusive of it.

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