Government Run Healthcare Makes Sense
With this type of outlook it might then surprise you to know that I favor a national health care plan, either a public "option" or the conversion of the current system into a single payer program similar to the Canadian system.
Why in the world would I feel that way? Simple; for the last 20 years I have had the responsibility over group health plans and have had to deal with insurance carriers.
In the last 10 years the health insurance industry has grown more profitable, has consolidated to just a handful of carriers, and makes literally life-and-death decisions about your health care based upon profit-and-loss considerations. In years past we as corporate Plan Sponsors have been able to influence some coverage decisions by using the leverage of taking our business elsewhere. That influence erodes more each year and has never been less than it is now. That's because there's almost nowhere else to go and the carriers know it.
Our last health care negotiations were hurt by the fact that only four multi-state fully-insured carriers remain: United Healthcare, Blue Cross/Blue Shield, Aetna, and Cigna. No matter which of these is your carrier, that means you're only marketing to the other three. As a rule, Blue Cross has the highest quotes by about 30% as they focus on margin rather than volume: if you want a better price than your current carrier that means you're marketing to only two others. During our recent re-marketing effort (to see if we could get a better deal than we got at our April renewal) we had UHC as our incumbent and Blue Cross was immediately out of the running due to price. The Aetna and Cigna representatives' main questions during our negotiations was "what's the other guy's quote?"
In this scenario its no wonder that the insurance industry is howling about the prospect of a government "option". Entry into this monopolistic and recalcitrant marketplace by a strong competitor would change the landscape to favor people rather than carriers.
Personal liberty would also be increased through a government plan because I believe many people with serious health conditions stay with their employers because our health care system is employer based. To change jobs and risk losing yours, or to start you own business and become self-employed means risking becoming uninsured. According to Dave Ramsey, even though foreclosures have been the highest on record this year personal bankruptcies due to unpaid medical bills are four times that of bankruptcies due to home foreclosure.
I'm loathe to depend on government for anything. But with government I have an elected representative that I can call if my government health plan isn't working. Who do I call if my carrier cheats me on coverage or overcharges me? The current health care system is dictating who can and cannot afford coverage, what is covered, and (since its employer based) where you can work. As such, I would suggest to you that the solution to this lack of freedom is, paradoxically, the government. I can elect my representatives but I'm stuck with my UHC rep.
Comments
Not so fast! There are many ways around this issue.
First, Thomas Nelson, with 645 employees has more options than what you mention.
Second, the issue behind the limited amount of carriers you seem to have access to, has more to do with state insurance laws than anything else. No one in the health care debate mentions any of this.
Third, and as you may know, and would know well, if you had an Administrative Services Only contract with one of the carriers, is that the cost driver of your premiums is not the insurance company, but rather the cost of doctors, hospitals, pharma and other providers. Your insurance premium is only a symptom of the cost of claims.
The government take over of health insurance does nothing to address the cost of doctors, hospitals, pharma or other providers.
What the government take over of health insurance does do is migrate the $2.5 Trillion dollars spent privately on health insurance premiums and moves that money to the federal government - a huge tax increase for those who pay taxes, a free ride for those that don't. Proponents say that since the money is already spent, it is not a tax increase. Businesses somehow think that they will be better off unburdened by dealing with insurance companies and the money spent on insurance - your stance.
What will make costs come down is competition among doctors, hospitals, pharma and other providers. Real competition means transparency and communication of services, prices and outcomes. None of this is addressed in reform.
What will make insurance pricing come down is removal of state insurance laws that inhibit carriers from entering state insurance markets. There are only three carriers that offer health insurance in all 50 states and DC - you have mentioned them. Each Blue Cross plan is chartered as a separate entity in each state they do business - they are not a national company at all but an association of different corporations.
The biggest change that needs to occur is the removal of onerous group laws - state laws - that only allow health insurance to be sold to particular groups - namely, large employers like Thomas Nelson, Unions and the Federal Government. If individual people could buy their health insurance from a bank, an association, a club, a university or any other type of group - insurance buyers would have mobility to purchase health insurance from any multitude of sources based on price, convenience, service, etc. If they wanted to switch, they have the freedom to do so. No job lock, no pressure, no unavailability.
If there is any regulation that needs to be enacted - it is that providers cannot be allowed to demand that patients contractually assign their insurance benefits to the doctor/hospital prior to any treatment being provided. Proof of insurance should be enough.
Insurance reimbursement needs to be paid directly to insured patients. Doctors, hospitals and providers must show/justify all charges and insured should pay directly - so they know what the cost is and act as rational consumers.
There are many issues - mostly created by state and federal regulation. Much needs to be undone.
It is the people that need to be in control, not the government.
Don't give up on the people.
Think outside of the box.
All the best,
SWD
Thanks for your comments. We are looking into an ASO arrangement, but at 475 employees we are close to a number too small to effectively spread risk without significant volatility. As you know, the decision will rest largely on the re-insurance market and what kind of stop loss coverage we can get and at what price.
Otherwise I agree with most of what you said. My major point of disagreement is that you seem, unless I'm misunderstanding your remarks, to believe in the carriers. Let us get regulation out their way and adequate competition among providers and all will be well. My experience has been different, and my belief is that carriers will behave morally only with a legal gun to their head.
Thanks again for your astute comments.
Jim