Redstate

I almost made this post much longer than it should have been by discussing ways to improve the system. I think what I will do instead is link to Rep Paul Ryan's American Roadmap. He seems to have done a lot of research on this and ha some great ideas (including the two that you mention) on how the government can actually help make the markets more efficient.

Most Americans can not buy private health insurance at any price because no insurance company in their right mind would insure someone with pre-existing medical conditions -- which is most of us -- unless there is some kind of government managed risk pooling.

Second, "out of state health care" doesn't make sense, either. Yes, New York has a lot of insurance mandates (most of which are quite popular with voters -- that is how they got mandated), but even without them I can't buy a Nebraska health insurance policy any more than I could by a Nebraska car insurance policy -- unless I want to only have my stays in Nebraska hospitals covered. Things just cost more in New York (not just health care).

And as long as health insurance is optional, someone gets stuck with paying the bills for the people who choose not to have coverage and get sick anyway, as even a single hospital admission can bankrupt most families.

Finally, while I don't think a single payer system is the way to go in the US, it is still worth noting that Medicare is by far the most efficient health insurer in America in terms of administrative overhead. Medicaid, administered by states, is #2.

Charlie Hall

1. Creation of a new class of health care corporation - Not for profit. I'm not sure if this would take legal measures to do, but if there were organizations out there that existed with the sole purpose to insure regardless of pre-existing condition we could possibly eliminate (or at least reduce) this problem.

2. Believe it or not, the network that your insurance (if you are insured) company has is most likely a national network. The networks are not managed by the insurance companies. They are managed by third parties. There really are only a handful of network administrators (every one that I have dealt with is national). Allowing people to purchase "out of state" insurance would still mean that they are able to access these networks. [Yes, I realize that this would take federal mandates to open the markets up. Or an easier way would be to give the National Association of Insurance Commissioners more power over policy approval as opposed to each individual commissioner controlling the state. This would set up the NAIC much more like the NASD or SEC currently are.]

3. This one is the stickiest of all the problems actually. There really is no way to mandate health coverage without expanding the government health pool. As we've seen in Massachusetts this leads to significant budget problems as people sign up for the state pool at higher rates that budgets can handle. One idea would be to privatize the state pool. There would still have to be premiums involved, but the hope is that a privately managed company would be able to minimize costs more effectively than a government program. [I'm not entirely sure if this type of a program would even be workable.]

4. I've actually never seen those statistics before. Could you provide a link? I have a feeling that there may be some dubious comparisons going on [as is usually the case when government programs are compared to private].

Here is my best brief response:

1. This would not be a new class. A generation ago, all Blue Cross and Blue Shield plans, all the Kaiser plans, and most local HMOs were not for profit. Most insurance companies (and there are hundreds, possibly thousands, in the US) did not focus on health insurance, with the exception of a few of the really big ones like Aetna. Why the not for profit plans have virtually disappeared is worthy of study.

2. There really is no logical reason why insurance regulation remains only a state function, it falls under the category of interstate commerce at least as much as banks. Your suggestions are worth pursuing but they would indeed require action at the federal level.

3. You are correct regarding the difficulty of the problem of the uninsured. There is not the political will to mandate health insurance coverage the way that there has been the will to mandate automobile insurance coverage. A major reason is that most poor and even middle class Americans can not afford even group coverage if it were not subsidized by their employer (and the government through the tax breaks for employee benefits). Privatization might save a little compared to government agencies in things like employee pay and benefits, but the fact is that the people who will go for the government program will be the ones who will have the highest health care costs.

4. Here is a link to the report that is the *most* favorable to the private insurers of all the analyses I've seen:

http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPap...

Even it reports that the administrative costs for Medicare are one third that of private plans. This is not really surprising when you think about it because there are tremendous economies of scale in the insurance industry. As a result, the usual result from economics that more competition results in greater societal efficiency doesn't seem to hold. This is also one of the problems with the idea of switching from an employer-based to an individual-based system: Even if you can solve the adverse selection problem that most insurance companies aren't interested in the business the majority of Americans who have health problems, there remains the difficulty that it is simply much more efficient to sell group insurance policies to hundreds of people at a time through employers than individual policies one on one.

I'm just a medical and health care researcher, not an expert on insurance. There must be some folks who are in the insurance industry who are reading this who can contribute.

Charlie Hall

although it is on the sales side.

As for why not-for-profits have disappeared, my guess (truly conjecture only) would be that funds dried up in the not-for-profit companies. The only one that I know of (in my area) that is (I think) not-for-profit (they take a lot of conditions that I can't get coverage for elsewhere) is associated with a religious organization.

My head tells me that a stronger NAIC would be good for the industry and for consumers, but my gut (federalist) has this strong dislike of the policy.

Your fourth point is starting to make a lot more sense. It really is an economies of scale issue. The federal and state governments are the largest health care provider (combining Medicare and the 50 different Medicaid programs). Together they make up nearly a third of the insurance market (nearly another full third is private insurance that mirrors these programs such as Medicare Advantage, supplements, etc,). This gives the gov't programs some major abilities to spread out administrative costs over a very large pool.

Interestingly enough then, it would seem to me (and I've seen articles to compliment this idea) that reform of Medicare and Medicaid would be a major way to affect change in the market. One such article is here:

The outline of such a reform has been clear for some time (indeed it was proposed by a largely forgotten Medicare Commission in the late 1990s, chaired by former senator John Breaux and former congressman Bill Thomas). The Medicare entitlement would be converted into a limited government contribution toward insurance, offered by private plans or the government. The government contribution would be set at a predetermined percentage of the average cost of an insurance plan in the area. Enrollees would be free to select whatever plan they found most attractive, including a public option, but if they selected a plan that was more expensive than the average, they would have to pay the additional premium themselves. This type of reform could be phased in, applied to new Medicare entrants so as to avoid disruption for those settled in their current arrangements.

This redesigned Medicare would look a lot like the new drug benefit, now in its third year. By any measure, the drug program's competitive features are working well to keep costs down for enrollees as well as the government, and the vast majority of beneficiaries like the program and the choices it has made available.

It would seem that the much hated (by those of us on the fiscal conservative right) Medicare Part D is a very good model for what a successful Medicare (Parts A and B) would look like.