Health Care Compromise – Reinsurance of catastrophic care

From the Boston Globe

“…the chiefs of Ford, General Motors, and Chrysler went to Washington to meet with the president and supported a suggestion John Kerry proposed during his presidential campaign: a reinsurance arrangement to pay for chronic or catastrophic healthcare costs, thereby effectively taking those cases out of private health-insurance plans.

…The Plan called for having the federal government pay three-quarters of the additional expenses for patients whose healthcare costs exceed $50,000 a year, provided savings from that cost relief helped reduce health-insurance premiums.

Removing those costs from private plans could have big effects. Although they constitute less than 1 percent of all cases, catastrophic care accounts for 20 to 30 percent of healthcare expenses.

If the government were to pick up most of the bill for catastrophic care, health-insurance premiums wouldn’t be under such constant pressure. According to some estimates, premiums would be 10 percent lower than if private plans continued to pay for such care.

Health-coverage costs are a recognized drag on US firms competing with companies from nations where health coverage is a government responsibility. It is a particularly pronounced burden in the auto industry, adding as much as $1,500 to the price of a new vehicle.

…a plan like this could cost at least $40 billion a year and could be paid for by repealing the Bush tax cuts for households earning more than $200,000.”

If we also standardize record keeping and remove competitive obstacles to interstate insurance companies we can move towards an optimal system that preserves the efficiencies of free markets with minimal government bureaucracy. I would also prefer that each individual or family own their own policy to optimize portability and responsibility.