Healthcare Crisis: Step 2 Let People Unite
Yesterday I proposed a multi-baby-step process to resolve the healthcare crisis.
Step 1, in yesterday’s post, is to get the State governments out of the mix thus reducing layers of regulation, oligopolies by the large insurers who can afford these regulations and thus allowing smaller innovative players to get into the mix and create both options and lower costs. http://lipspeak.blogspot.com/
Step 2 would be to allow any group of people to band together as an insured group. Let the people work this our. Any groups would be allowed and encouraged, whether employees in a corporation or several corporations, members of a union or association of any kind (e.g., AARP), those helped by a charity, trade associations, industry groups, etc. The group could be set up precisely to purchase health insurance.
Groups could be local or national. Since Step 1 is completed, this is not an overly burdensome proposition.
The groups would be able to hire a professional health insurance negotiator. This person would help the organization decide how to create the best possible insurance solution given the nature of the group. Perhaps self-insurance with a Third party Administrator and catastrophic coverage above a significant cap, perhaps with an HAS built in. Self-insurance drives wellness because the group saves money if claims are lower than anticipated. Self-insurance allows for greater consumer-driven healthcare because again, lower healthcare costs benefits the group.
In other scenarios the group might be better off buying insurance from an existing provider, or perhaps a combination of providers. The group will decide what is provided and at what deductibles and co-payments apply. Chiropractic care? Psychiatric or psychological treatment?
Almost everyone will have a choice. There will be an affordable option for everyone. People will get creative. People will find their best personal solution. Groups will grow and change as demand changes. If there are holes in the system at this point, the government can look at next steps.
Most important, increased competition will drive costs down. Increased professionalism in developing and negotiating healthcare coverage will drive costs down and options up.
Step 1 and Step 2 alone will dramatically reduce healthcare costs within the federal government’s universal regulatory regime.
20 Responses to “Healthcare Crisis: Step 2 Let People Unite”
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Your proposal doesn't address some very important issues – like those with chronic illnesses or people who are self-employed and don't have a 'group'.
I think this is an excellent idea. People should be able to form buying groups to buy insurance. jcavhs makes a good point though – if I were starting a purchasing group I would try to get the lowest risk people I could find and negotiate a low rate.
Having been a member of group insurance plans (twice in my life) and now being an individual paying for my own insurance, I am in complete agreement with “Step 2″. People should be able to unite and create a group to lower insurance costs. Not having this option and being forced into an individual plan at a higher rate is essentially discrimination from my point of view. Also as a side note, this is one of the rare times I see DaGoat and I are in agreement.
Jcavhs hit the nail on the head. Groups are great if you're low risk, young and healthy. As long as the profit margin is the the primary measurement used to negotiate group policies, the poor and chronically ill will be marginalized. Once you experience a debilitating medical problem, and sure as death, you will; I'm afraid your fellow coop members will see you as a liability in the numbers game that's played by private insurance.
People fall for the illusion of immortality. It's the other guy who gets sick, gets hit, or experiences a sick child. It's this illusion that private insurance counts on to maximize profits on the young and drive the needy out of the system.
ALL of us will someday require the expensive care that comes with living a mortal life, so DaGoat wanting to select fellow healthy individuals for his group is the delusion that drives the argument that lets insurance skim profits. Health insurance must cover everyone in a common pool simply because each of us will someday be that medical liability in the system that groups wish to exclude. Any other tactic to “cheat” the short term expense is just ignoring reality.
OK, some good points are being made here.
So how about we combine the group purchasing idea with the one that I floated in the part I thread…that people should be able to purchase health coverage insurance that would kick in to pay for higher premiums if or when they become subject to higher premiums on the basis of a chronic illness.
The way this could work would be to permit purchasing groups to form with the requirement that the group members would purchase this type of insurance on top of their traditional medical policies. That way there is no longer any incentive for the group to purge its own members if they become sick, nor is there an incentive for the medical insurance company to drop its coverage of anyone because it gets appropriately paid for the higher risk members.
CS
“So how about we combine the group purchasing idea with the one that I floated in the part I thread…that people should be able to purchase health coverage insurance that would kick in to pay for higher premiums if or when they become subject to higher premiums on the basis of a chronic illness.”
Why make it a multilayer approach? Health insurance that requires an additional policy or payment for what is a medical certainty is short-sighted. It's like saying you should only buy life insurance when you're about to die.
Try this.
The Health insurance pool consists if everyone: healthy, sick, dying, and just born. You and everyone else are a member of that pool throughout your life. Because, there is always some who require expensive care, that expense basically stays fixed within the pool as some die and new members enter. Costs for insurance are thus an average over a lifetime, so it may be a little higher than if you were in a pool of younger people, but cheaper if your group were older.
The universal pool removes the sliding scale we all have to fight right now. Look at it like we're told to do for retirement. If you're 22, putting a relative small amount of money away each month makes you wealthy at retirement. The later you start, the more you have to put away to get the same benefit.
As long as you try to play the specialized pool game, you merely maximize profits for the insurance carrier. If the criteria for a pool is continuous coverage from cradle to grave, payments normalize throughout your life.
Health insurance that requires an additional policy or payment for what is a medical certainty is short-sighted.
It's not a medical certainty, that's the point. Your model assumes that over our lifespans, our medical risks should all be considered equivalent but that's not even close to being true. Sure, I accept part of your premise, that many people are healthy and low risk at younger ages but have more expensive needs when they're older. But it's undeniable that some young people have chronic illnesses and some older people don't- so the system that I'm floating would address that by spreading the risk somewhat to all, but in a manner of smaller insurance payments for that second tier of risk, so that the risk is pooled but the actual costs of the extra care are only realized when the events actually happen.
I'm still thinking it through but it seems to me that your approach just ASSUMES the higher costs for everyone and spreads it through the whole population, while the approach I'm suggesting is based more on what the actual costs pan out to be. So, no, I don't see that this is maximizing profits- instead, it's just assigning the real costs and covering those costs through an insurance pool.
CS
And your approach ASSUMES you can predict your medical future. It's like I said, the only time to buy life insurance is when you're on your deathbed. CS, disease and injury and resulting death are inevitable. Pools deny that fact.
You seem to think that a rational approach to your medical needs will work in the crap shoot of life. Why buy car insurance, aren't you a safe driver? How about your kids?
The illusion of control makes people believe they can avoid cancer, heart disease, and auto accidents. They can't. Insurance makes money on that illusion.
It's like the old joke about insurance, you bet the insurance company that your going to die, and they bet you're not. You just hope they win.
And your approach ASSUMES you can predict your medical future.
That's not true at all- just the opposite in fact. Since I assume I DON'T know my medical future, it's rational to insure against risk. And since I don't know if my potential future health conditions will lead to higher premiums, its rational to insure against THAT risk, so that I have security in knowing that I won't be uninsured in the future.
I don't understand why you keep talking about people choosing NOT to be insured because they (in your mind) think they're immune to risk. I thought the topic of discussion was that people WANT coverage but are sometimes denied it or it's too expensive.
CS
“Step 2 would be to allow any group of people to band together as an insured group. Let the people work this our. Any groups would be allowed and encouraged, whether employees in a corporation or several corporations, members of a union or association of any kind (e.g., AARP), those helped by a charity, trade associations, industry groups, etc. The group could be set up precisely to purchase health insurance.”
I was speaking to this article exactly. Groups created to get the best price for their insurance also means, as DaGoat said, that these groups will consider who constitutes the group their in. If I'm going to band together to get the best price, I should rationally choose a group of young healthy people with “low” risk. That's the illusion.
Are these groups for life? If not, don't you finally end up in a group that's prohibitively expensive?
Do you kick people out for getting sick? Otherwise, shouldn't your rates go up if people mess with the stats by getting expensively sick?
Are groups formed just from the known healthy? Doesn't that dermand that we all end up in the unhealthy group?
At the very best, groups save a few bucks now for higher rates in the future; at the worst, your in a group until you're sick or too old to pay for insurance.
One universal group normalizes the costs and assumes nothing but the reality of the human condition.
“And your approach ASSUMES you can predict your medical future.
That's not true at all- just the opposite in fact. Since I assume I DON'T know my medical future”
You can predict your medical future, that's the point. You will get sick and die. Being in one group from birth to grave accepts that reality.
One group also means everyone is insured. We currently pay for the medically uninsured anyway through payments inflated to cover them, so why not make them part of the group?
Are these groups for life? If not, don't you finally end up in a group that's prohibitively expensive?
Do you kick people out for getting sick? Otherwise, shouldn't your rates go up if people mess with the stats by getting expensively sick?
Are groups formed just from the known healthy? Doesn't that dermand that we all end up in the unhealthy group?
Those are all criticisms brought up in the first few comments here, but then I proposed something that I believe could eliminate that problem. If people could enter a group that included people of varying age and health risk, by purchasing insurance to pay for higher premiums if/when they kick in (every member of the group would have to do that) then there would be no incentive for people to try to organize themselves according to lower risk when they're able to do that, and no aggregation of people according to risk like that at all
You can predict your medical future, that's the point. You will get sick and die. Being in one group from birth to grave accepts that reality.
But that's not true, once again. Everyone dies, but some people get hit by a bus when they're 29 and die immediately with no medical bills. Some people (very few, but still) live till 103 with very few health problems and then die in their sleep. These are extremes, and on the other end you have people who might need 15-20 years of high cost medical treatments, surgery, pharmaceuticals, etc, some people even more than that, and some people far less than that. The whole point I'm making is that we should all pay something for the risk that we'll be one of the costly statistics, but that doesn't mean we all will be. I'm FOR pooling that risk, so I don't know why you're arguing otherwise as though I just want to pretend it doesn't exist. I'm just saying the risk isn't equal for each individual- actuarial tables can predict how many people will fall ill with various conditions, but can't predict which individuals it will be.
CS
So we agree, pooling the risks make sense. So, the bigger the pool, the more disributed the risk.
The biggest pool is cradle to grave, so the logical way to proceed is to put everybody in the same pool.
I just disagree with your concept that there should be additional payments to be made based upon personal bad luck. Under your system, do people who die in their beds at 90 get a rebate? If God forbid, one of your children is born with something horrible and expensive, do they go into the loser's bracket of higher payments, and do you go with them?
It seems to me you wish to needlessly over complicate the situation. If you are not in the biggest group possible, and can be kicked out if you are an unfortunate anomaly, you are betting a few dollars against unaffordable insurance costs in the future, that you are somehow immune to the exigences of living. The 2nd highest group of bankruptcies today are people that believed the same thing.
Keep it simple, keep it realistic, make it work for everybody. Subsets of the entire group were devised as a selling technique for profit, not health. Health care is a service all should receive equally, no one asks that some people pay more for police protection. It would only be that way if cops were a for profit organization.
No, I don't agree with 'the bigger the pool, the better.' As long as each subgroup is heterogeneous, which would happen if people weren't selectively aggregating or put into aggregates, then the risk is still well distributed.
CS
Just curious, what's the problem with bigger pools? I can't see a downside.
Thanks
Well, you seem to be talking about the biggest pool of all- a universal pool of all citizens- and that leaves out the potential for choice. Your analogy to police protection is apples to oranges because healthcare is much more complex and involves personal decisions that should be between doctors and patients as much as possible (realizing of course that private insurance also interferes with that relationship to a degree- but when we have options then people can make choices based on cost benefit ratios, pay out of pocket if necessary if they can for things that aren't covered by insurance.)
I also believe that if we went to a single payer system and the government attempted to keep costs down the same way they do now- by keeping to low budget administration (which prevents them from weeding out fraudulent Medicare claims) and paying doctors and hospitals a lot less- that this is going to lead to all kinds of unintended consequences. Primary care doctors are already in very short supply, particularly in some regions, and their numbers are certainly not going to increase to meet increased demand (which will happen if we start insuring more people) then virtually no one would choose to be a primary care physician anymore. What then, the government starts ordering people what profession they have to go into?
Incidentally, another thing to consider about your police analogy- even as much more simple as police protection is (without as much variation as 'healthcare', that is), would you even consider having police forces run by Washington DC? Remember that that's how a univeral pool, single payer system would be administered, not at the community level as police forces are administered.
Cs
“Well, you seem to be talking about the biggest pool of all- a universal pool of all citizens- and that leaves out the potential for choice.”
Exactly. What choice is important that an inclusive pool denies? My point all along has been the subsets give one merely the illusion of choice based upon temporary benefits like age. What do you ultimately gain if you save some money between 20-30, but pay much more later, 40+ – ?
As to your second point, subsets do nothing to relieve the downward trend in the number of General practices. That trend will need to be addressed regardless. I'd start with the AMA practices that have limited the number of all doctors.
Lastly, we do have a federal police force, the FBI. They're run from Washington, and the wheels haven't fallen off yet.
Yes, the FBI is a small subset of all law enforcement though, and logically is centrally administered since it deals with federal law enforcement. That's much different than an individual's health care decisions being made by DC beaurocrats.
Scale of the programs matters too, which is why the arguments that “Sweden does fine, why shouldn't we be able to do it here?” don't hold water either.
What choice is important that an inclusive pool denies?
Tons. By keeping the private system you keep more market forces in place and any govt intervention IMO should be to make the market function better rather than making the federal government a monopsonist, which means that they'd have to control all the resources. They'll have to do that either by rationing or by allowing costs to grow out of control, and neither one of those is an acceptable solution to me (or most Americans, when they stop to think about it.)
“Just curious, what's the problem with bigger pools? I can't see a downside.”
Besides the lack of choice as CS argues, there would also be no financial incentive for one to be healthy. You have the free-rider problem. Why should I subsidize the health care of someone who eats a big mac every day? (You asked for the downside. I'm not saying your idea is wrong. Just saying that there is a downside).
With that said, I certainly understand (better than most as a parent of a child with a chronic disease) that a lot of health problems are not predictable or preventable. That's where the free market model of health care breaks down, since the free market is based on the ideal that the result we get is directly tied to our decisions. CStanley, I find the idea of health-status insurance intriguing. I did read the article you posted in the first thread. My main concern with it, however, is how one decides when the “lump sum” gets put into the account. Some diseases are more costly than others, so some policies would have to be put in place (ie. we'll pay X amount for lung cancer, but Y amount for beast cancer.. Oh, you have what? That's a rare disease that's not in our policy… we'll just give you Z amount and call it even, deal?) That could be problematic. But again, the idea is interesting since it would allow a chronically ill person to still be insurable.
Anyway, health care is my issue, and I'm late on the scene in this series of posts. I'll have to catch up with part 3 now.
That's a good point about the health status insurance, adelinesdad, and I wondered how that would work as well. I assume there would be some sort of table that would determine average amounts that the insurance companies would agree to for higher premiums for certain conditions, but it's certainly something that would have to be worked out.