Comments on: Obama And Individual Health Insurance

By: Jay

Jay — Thu, 24 Jul 2008 07:22:08 +0000

Don: I'd love to brainstorm with you too. But I think it would be more productive if we could brainstorm collaboratively with anyone else who wishes to share their ideas. And what could be a better place for collaboration than a wiki? So, I've just created a page on the Colorado Health Insurance Wiki called "Designing the perfect health care system" where we can brainstorm and hopefully get input from others. (If you've never played with a wiki, this is a good chance to start - it's really easy) Or, you could always write a guest post on this blog. For you Don, I'll publish anything you write as-is... maybe. :)

By: Don Levit

Don Levit — Thu, 24 Jul 2008 00:06:11 +0000

Jay:
I’d like to brainstorm a bit with you.
Should we do so off of the blog?
Don Levit

By: Jay

Jay — Wed, 23 Jul 2008 23:00:04 +0000

Don,
That’s a good plan!

By: Don Levit

Don Levit — Wed, 23 Jul 2008 22:03:16 +0000

Jay:
Good point.
That is why I am suggesting that contributions be paid for 2 years, in which coverage accumulates, but does not become effective until year 3.
It would be similar to a defined contribution plan, which does not vest until year 3.
Don Levit

By: Jay

Jay — Wed, 23 Jul 2008 21:16:29 +0000

Don:
I am very familiar with VEBAs. However, the V (for voluntary) is a bad combination with no underwriting (as discussed in the article). People would not contribute to the pool until they need benefits and be able to enter into the pool with no problem when they do need benefits. So the pool would essentially be funded only by the people needing benefits.

By: Don Levit

Don Levit — Tue, 22 Jul 2008 22:48:32 +0000

Jay:
I am no fan of for-profit insurers, or really, any financial entity in which profits come before the mission, its very reason for existence.
If its mission is simply to make money, well, that’s for another day.

There is a difference between for-profit, non-profit, and loss.
Government as a funding vehicle for health expenses is a loss leader in many respects.
In order to really tackle the funding issue, we must 2 do things:
1. Pre-fund for future expenses
2. Have these reserves owned by the participants.
Neither of these 2 requirements are met by the federal government.
I will be happy to detail why that is so, but let’s not lose sight of a not-for-profit insurer which meets those 2 requirements: A Voluntary Employees’ Beneficiary Association (VEBA). Are you familiar with VEBAs?
Don Levit

By: Jay Norris

Jay Norris — Tue, 22 Jul 2008 20:56:22 +0000

Don,
Thank you for a good response. I didn’t see anywhere in the article where Louise mentions government footing the bill. But you’re right, rich (mostly employer sponsored group) benefit packages increase the demand for many services because providers are over recommending/prescribing services and medications that really aren’t needed. And consumers aren’t questioning anything because the insurance is covering it with no problem.

Even though the article didn’t address a government solution, I’ll play devils advocate in response to the question about how such a solution would be less expensive…
Mainly, less overhead and less of a reason to try to find more ways for people to use the system (usage). In the profit based private sector system, the more people that use the products and services – the more profit there is to be had. The corporations need to show shareholders growth year after year. Pharmaceutical companies push providers to prescribe more, providers run extra tests and procedures to pad their pockets, the AMA, pharma, and the insurance industry bankroll large amounts of money to lobby lawmakers and fund think tank organizations.
Overuse and overhead are the problems. A government system discourages usage as much as possible and runs lean.

By: Don Levit

Don Levit — Tue, 22 Jul 2008 17:18:22 +0000

Louise:
Thanks for providing your thoughts.
Insurers are merely middlemen, passing on the higher medical costs in the form of higher premiums.
And, if the premiums are starting to be prohibitively expensive in the private sector, why would they be significantly less expensive if the government was footing the bill?
What does not work in the private sector will not work in the public sector, all else being equal.
Even a potential savings of administrative costs has little relation to the cost of the medical care, after the administrative savings are factored in.

The cost of medical services has been rising far faster than wages, for probably about the last 20 years.
The only way to bring costs down, in my opinion,is for the unrealistically high costs to be reduced, due to lack of demand at those levels.
May insurance benefits be partially responsible for these high costs not being reduced?
Don Levit