Tag Archives: Health Insurance Exchange
Despite deep flaws that will have to be corrected, the Patient Protection and Affordable Care Act (ACA) has three aspects that make me optimistic about medical entrepreneurs being able to surmount the law’s barriers and create a consumer-dominated, market-based system of medical care and health insurance that will ultimately deliver high-quality, affordable medical care to everyone:
1. The creation of consumer value
2. The rise of high-value local health plans
3. The achievement of effective disease prevention
In Part 2, I discussed the creation of consumer value as an unplanned result of ACA’s forcing individuals—and not their insurers—to pay for their normally consumed medical services. In Part 3, I described how new local health plans built around these providers will be able to displace national PPO-based carriers by creating a virtual cycle of ever higher medical quality and constantly improving affordability. In Part 4, I addressed how these innovative health plans can dramatically move the needle on effective disease prevention. In this concluding installment, I’ll talk about the challenges facing the innovators who will be responsible for achieving these benefits.
I need your help (and no, it’s not a request for money).
The attorneys general (AGs) in at least 14 states (Colorado, Louisiana, Florida, South Carolina, Alabama, Nebraska, Texas, Pennsylvania, Washington, Utah, North Dakota, South Dakota,Idaho, and Indiana) have joined together to challenge the constitutionality of the just-passed federal mandate that will require all documented American residents to purchase health insurance beginning in 2014. As a former health insurance actuary, I support this challenge on the basis of my extensive analysis and conclusion that there are voluntary alternatives to mandates that will be even more effective at providing universal health insurance access while preventing the adverse selection (i.e., free-riding) that would otherwise destroy any universally available health insurance exchange like that specified by the federal law.
As the Democrats and GOP leaders prepare to meet with the President at the February 25 health summit, the Republicans have a big problem. They don’t have a plan. While demanding a clean-slate do-over from the Democrats, all they have to offer in return is a grab-bag of simplistic, ineffective remedies that won’t fix the problems of our unsustainable health care system. They lack the vision thing. They need to recognize the market failure at the root of the system’s dysfunction and to propose the following actions to fix it. (Note: Hyperlinks provide additional discussion for those wanting to delve further.)
First, let’s agree on our ultimate goals. Neither party has done this. Here they are:
1. Access to affordable health insurance for all Americans
2. Sustainable medical care affordability and value
3. Free-rider prevention that allows universally available insurance to work
4. Voluntary participation with no individual or employer mandates
5. Financial protection against unaffordable, medically necessary care
6. Individual choice of insurers, providers, and treatments
7. Portability of coverage regardless of employment or government assistance
8. Effective prevention of chronic diseases that now consume 75% of total medical costs
The raging health reform debate on the public option has sucked all the air out of the room on the central question that we should be addressing: How can we fix the insurance market failure that prevents everyone from buying affordable health insurance that covers all medically necessary, otherwise unaffordable care?
The current House and Senate health reform bills try to accomplish something like this by creating an insurance exchange that allows the uninsured to buy coverage (and by expanding Medicaid). But they do nothing to correct the overwhelmingly dominant employer- and government-based programs that constitute the real looming train wreck.
In theory, an exchange or similar mechanism that allows universal insurance access is not just a good idea, but an essential one. But it must be open to everyone, regardless of employment status or eligibility for government coverage. Properly structured, it can be the critical component for achieving an effective, sustainable health insurance and medical care delivery system. Neither of the shortsighted, overreaching congressional bills will yield this result.
I never had much hope that Senator Max Baucus’ Finance Committee would bring forth a sensible anodyne to the House’s fatally toxic Affordable Health Choices Act, although I admit that his earlier markup had some promising features. While it didn’t have anything that would ever bend the cost curve in any direction but skyward, there were some aspects of his approach to the insurance exchange that showed at least a modicum of respect for market realities—unlike Speaker Pelosi’s risible public option. But all that vanished yesterday with the Senator’s new markup.
I’m still wading through the bill, but one conclusion stands out: the insurance exchange, as described in the bill, will fail. Or more accurately, any private insurer or member-owned co-op that offers individual health insurance through the exchange will be quickly bankrupted unless it can get massive subsidies from the government.
President Obama went all-in on health reform tonight (September 9, 2009) with his win-one-for-the-late-senator pitch to the assembled houses of Congress. Beyond his always-inspiring rhetoric, his actual proposals offered virtually nothing we haven’t heard before. His essential message: when it comes to health reform, I’m asking the American public to accept hope over experience, faith over fact.
Have Faith that the government will provide a public insurance option that is more competitive, efficient, fair, and effective than anything you can get from a private insurer. Subtext: Ignore the man behind the curtain who has already given you the unmatched fairness and effectiveness of FEMA, Fannie, Freddie, Medicare ($74 Trillion in the hole), Social Security ($17.5 Trillion under water), the national debt ($11.7 Trillion and counting), the sex-offender registry, and the SEC’s crack enforcement of Bernie Madoff’s Ponzi scheme.