Are Private Insurers Really Giving Up Much Ground?

Does Obama Have Enough Votes in the Senate?

Over at Health Care Pollicy and Marketplace Review  Bob Laszewski explains why the insurance industry has made a second concession to health care reform. In November, the industry said it was willing to cover everyone. Now, it has decided that it is willing to move toward charging everyone in a given community the same premium, regardless of pre-existing conditions. (Today if you have employer-based insurance, chances everyone in your company pays the same price for a particular plan, but if you are in the individual market, buying insurance on your own, insurers in most states are allowed to charge you more if you are sick or if you are old.)

Earlier this week, insurers sent a letter to Congress this week offering to phase in “community rating” as long as legislators enact “an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance. Laszlewski translates: “as long as the federal government mandates that all men, women, and children in America have to be in the risk pool we’ll take the underwriting risk.”

But just how much risk are insurers taking on?  Laszewski’s answer: not much.

He explains: “Underwriting rules are meant to protect [the insurer] against people buying insurance on the barn after it burns down.” By the same token, you don’t want people waiting until they are sick  before buying health insurance. “But if everyone is required to buy the insurance from the start, you don’t have the problem of people putting off or buying insurance when it is advantageous for him or her and not for the insurer.

“Therefore, if there is a mandate that everyone buy insurance ‘you don’t’ have to charge the sick more than the healthy because not only are all the sick folks covered ,but you also have all the healthy people covered to offset their costs—a mandate that everyone buy insurance automatically has a perfectly balanced risk pool.

“It is possible that one insurance company, particularly a small one, could somehow get more of the sick people in their pool,” he acknowledges, “but if that occurred it could be relatively easily taken care of through reinsurance between players.”  This would level the risk.

“A few months ago, the industry offered to guarantee that everyone would be insured—if there was an individual mandate. Now they have added the offer to charge the sick and the healthy the same rate—in the individual market.

“At that time of the first offer,” Laszewski says, “I called it, ‘Much Ado About Little’.

“The latest offer is ‘Much Ado About Little, Part Deux’”

Insurers really are not taking on much added risk. But, Laszewski points out “at a time when liberal Democrats are pushing to put a government-run health plan in direct competition with the private sector,” this is “good PR” for the insurance industry.

And that is why insurers are making this second offer. They are desperate to block that public sector alternative that we at HealthBeat have decided to call Medicare E (Medicare for Everyone—hat tip to reader Pat S. for suggesting this label.)

Both the insurance industry and conservatives are adamant on this point. Will the Obama administration give up the idea of forcing private insurers to compete with a public sector plan? I don’t think so. As the president said at the health summit, many think we need the public-sector option to give people “choice” and to “keep the private insurers honest.”

Insurers loathe the idea because they realize that if they are competing with Medicare E, it will serve as a benchmark for regulation. In order to protect Medicare E from unfair competition, the government will have to lay down very strict rules, requiring that private insurers offer at least as much coverage as the public plan (so that they don’t “cherry-pick”  younger healthier customers looking for a less comprehensive, cheaper plan.) For the same reason, private insurers probably would not be allowed to offer low-premium, high-deductible plans. And they wouldn’t be able to sell Swiss Cheese policies filled with hidden holes.

Yet today, this is how many for-profit insurers make their money. And they  know that if the government is not trying to protect a public-sector plan, it is much less likely  to issue tight regulations, and much more likely to let companies “compete” with each other however they like—even if consumers end up buying plans that really don’t deserve to be called “insurance.”

How Will This Play Out in Congress?

A couple of weeks ago, Robert Blendon professor of health policy and political analysis at Harvard’s Kennedy School of Government told me that if the administration refuses to cave on the public sector plan “no Republican in the Senate will vote for universal coverage.”  In other words, unless the president  gives up Medicare E, Democrats will not have enough votes in the Senate to pass the legislation this year.

But Blendon, who is also a professor at Harvard’s school at public health thinks that, in the worst-case scenario, it is likely that Democrats could succeed in passing “Phase 1” of universal coverage this year.
Just what would that mean? I put this question to Blendon because he knows more about health care policy and politics than many reformers. While some have immersed themselves in the wonky intricacies of health care policy, and others are well-versed in the intrigue of American politics, Blendon knows both–as his cross-appointment at the Kennedy School and the School of Public Health suggests.  Even when what he says is not what I want to hear, I recognize that Blendon understands “the political process.”  He knows that Democracy is messy and that, often, it is disappointing. Above all, it is a process of constant, unending negotiation. 

This year, Democrats will take whatever they can get: they are committed to making progress on healthcare reform. So they will not make the mistake Democrats made in the early 1990s when they insisted on “all or nothing.”  Blendon suggests that this year, Phase I might mean a bill that mandates that all children must have insurance, with subsidies for families who cannot afford it.
 The administration also is likely to begin Medicare Reform this year, in an effort to lift the quality of Medicare while lowering the costs. By using the comparative effectiveness research we now have when deciding how much to pay for certain services, and by beginning to reimburse Medicare physicians for outcomes rather than volume, reformers could start to set standards for national health reform..

Finally, Blendon suggests, Congress might decide to let 55-65 year olds buy into Medicare. Though this
would be expensive. Today, Medicare is so wasteful that the premiums for this age group would be high; many would require subsidies.

The idea that this year, Congress may only pass Phase 1 of universal coverage will disappoint many.
Yet as observers such as Dr. Atul Gawande have pointed out one cannot transform a $1.7 trillion industry “with the flip of a switch.”  I agree. Inevitably, universal health reform will unfold in stages. The goal, as President Obama has said with great consistency, is to cover everyone “by the end of my first term. “

Finally, Blendon points out that in 2010 a number of Republican Senators will be running in states that Obama won. Following that election, liberal Democrats might well have the votes they need to pass universal coverage— without making  concessions that could, in the end, hand control of national health reform over to the for-profit insurance industry.

22 thoughts on “Are Private Insurers Really Giving Up Much Ground?

  1. I’m not terribly good at ascribing motives and tend to believe others are roughly as corrupt as I am, lacking evidence to the contrary. that said, it seems to me the record shows the insurers have made two moves in a positive direction. that’s good. perhaps they’ve done so because they fear even bigger changes. that’s good, too. on the other hand, the dynamic of pushing away people who seem interested in dealing is a puzzling strategy for those who want action and are involved in an uphill battle

  2. Excellent political and analysis by Mahar and Blendon.
    Each day that passes I am more optimistic about real change in 2009 and 2010.
    But as Maggie Mahar knows this is as much a debate about WHAT WE SHOULD PAY FOR AS HOW WE PAY OR WHO SHOULD BE PAYING
    Dr. Rick Lippin
    Southampton,Pa

  3. Jim & Rick
    Thanks for your comments.
    Jim–
    Bob Laszewski knows the insurance industry better than I– He is a business consultant and not at all anti-business.
    But he believes that insurers have done a very bad job and brought many of their troubles on themselves.
    And when he says that these two “concessions” are really nothing, (“Much Ado About Little part 1 and 2”) I believe him.
    Keep in mind that these concessions come with a string attached; the demand that everyone in the U.S. has to buy insurance, and that the governmetn will subsidize the purchase of that insurance for a great many people.
    This means that insurers get millions of new customers who come to them, govt subsidy in hand, with the governmetn promising to make up the
    difference between what families can afford and what insuers choose to charge.
    This is an enormous bailout of an industry that
    is desperate for new customers.
    And the industry wants the bailout oon its terms–without having to compete with anyone who might see healthcare as a public good, rather than as a profit center.
    We are the only country in the developed world that does not tightly regulate private insurers.
    Regulation is what they fear–and what they need.
    (If you read my interview with Ron Pollack of Families USA some time ago, you’ll see that and many people in Wahington) knew that insuers were going to agree to guranteed issue and community rating –as long as they got the mandate.
    In other words, this is a charade—not negotiation.
    Finally I am afraid that there is ample evidence that, on average, the for-profit insurance industry is more corrupt than you are.
    Dr. Rick–
    Thanks —

  4. This is a very good analysis of the risks faced by those who seek real health care reform this year. The insurance companies are clearly hoping to mask their desire to maintain the current failed system by appearing to favor reform.
    The president has called for the creation of a public health insurance plan as a choice for anyone who wants it. Anyone who doesn’t can stay with private insurance. That seems fair and reasonable, but of course threatens the industry, which is working to defeat it.
    The task for those who support to president’s plan is to make sure they don’t succeed. Every phone call helps, every email.
    I’ve joined the campaign for reform, a first in my 62 years, and frankly I’m having a ball. I really feel like I’m doing my bit to put this thing over the top.
    The coalition I’m working in to enact the president’s plan is called Health Care for America Now.

  5. David–
    Congratulations! (and welcome to the blog.)
    I, too, think the president’s plan is fair and reasonable. It doesn’t force anyone into a public plan, but it does give people that choice.
    If Medicare is reformed, as I think it will be, Medicare E (for everyone) could be Excellent.
    This will be an American experiment that will give everyone a chance to see how well they like Medicare E.
    In an ideal world, such a proposal should be able to pass Congress. But lobbyists have great influence, and many conseravtives are ideologically opposed to any form of govrnment healthcare–even if it is not imposed on us, but left open as a choice. (Some are even opposed to Medicare).
    So we can’t count on Congress passing all of Obama’s plan this year–I think Bob Blendon is right about that. That doesn’t mean it can’t happen. But if we don’t get the whole enchilada this year, we shouldnt’ view it as a defeat. (And we definitely should take what we can get–while leaving the door open for more. This is a process.)
    Meanwhile, everything that you are doing to increase understanding of the problems–and the president’s plan– will help next year. I am very hopeful that we will see the president’s plan enacted during his first term.

  6. Maggie,
    I want to offer several thoughts on this.
    First, you or Bob may have better information that I do, but my understanding is that insurers, while they have offered to no longer use medical history or current health status to determine insurance premiums, they still want to be able to use age, occupation and geography which is essentially what insurers in Massachusetts do. In MA, however, insurers cannot charge the oldest and those in the most dangerous occupations more than two times their preferred rate.
    On the public option, we’ve had this discussion before. It’s very difficult for insurers to accept the federal government as both the entity that sets all the regulatory rules that everyone has to live by and as a competitor at the same time. I’ve said in the past that government dictated (as opposed to negotiate) prices could exacerbate provider cost shifting to private insurers which would drive private premiums to uncompetitive levels. Moreover, if there were no requirement that the public plan cover all of its costs, including those performed for it by other government agencies, solely with income from premiums, it would also provide an additional unfair advantage.
    In the current market for Medi-gap policies, there are 12 standardized benefit designs labeled A-L. This market functions quite well without a public option as a competitor. There is no reason why the private market for primary insurance couldn’t function equally well if minimum coverage requirements were set by regulation. Much of the dysfunction in the private insurance market that you and others keep writing about is centered in the individual market space which accounts for only about 10% of the people who have commercial health insurance and only about 5% of so of the industry’s revenue. Finally, fully 40% of plan members with commercial insurance are with NON-PROFIT carriers. These are mainly the Blues other than Wellpoint’s 14 licensees plus Kaiser, Harvard Pilgrim, Medica and a few others.
    You have also criticized Massachusetts for offering high deductible plans that lower income people can’t afford to use. With state subsidies only going up to 300% of poverty, they accepted these plan designs for cost reasons, and their still unaffordable, even for a relatively wealthy state. I think the country would be better served in the near term if CMS finally gets serious about payment reform and stops paying for cost-ineffective care or at least makes the patient pay a much higher percentage of the cost. It’s wasteful utilization that is driving healthcare costs through the roof, not insurance company profiteering. If CMS is successful in such an effort, Medicare’s costs could also slow toward a sustainable rate in line with nominal dollar GDP growth. If it does all this and it looks like there still might be a need for a public option to compete with private insurers, we can revisit the issue then.

  7. “Regulation is what they fear–and what they need.”
    I’ll second that.
    They agreed to make insurance available to everyone, as long as everyone is compelled to purchase it.
    Let’s just stop right here. Consumers are not the people who need to be compelled or ordered to do a damn thing. We’ve been kicked around and abused long enough by all things healthcare, including the insurance companies. Who’s “negotiating” with private insurers, anyway? Why aren’t we ordering them around and compelling them to have morals and ethics?
    Driving a car is a priviledge. But if you want that priviledge, you’re required to maintain insurance, and bad auto insurance companies don’t stay in business. Are we saying access to healthcare is a priviledge? There’s something downright unconstitutional about ordering me to purchase health insurance. That’s like ordering me to grease the palm of the local thug. I don’t think so. Go Obama Go…Medicare E.

  8. Barry–
    I agree that we need to reform Medicare.
    And if we have Medicare E (for everyone) that gives
    Congress an added incentive to stand up to the lobbyists and let Medicare begin to contain costs in a way that does not undermine the quality of care.
    So this is where we should start–not something we take up later.
    You also are right that private insurers may not be able to compete with Medicare E. So be it. As I have said before, teh point of healhtcare reform is not a bail-out for the insurance industry; the goal is to offer all Americans the best and most affordable coverage possible.
    In theory,private sector companies are nimbler and more innovative than the govt and so should be able to compete–even though they need to make a profit, lobby Congress, and pay their exectutives millions.
    But if they can’t– this is their problem. Taxpayers cannot afford to pay more for healthcare in order to keep for-profit insurers in business.
    As I have said before, there is every indication that non-profit private sector insurers will do well when competing with the government. They have been innvovative.
    Lisa–
    We do need to require that every American buys insurance. Everyone needs to be in the pool so that we share the risk.
    But the insurance industry must be tightly regulated so that people are not required to buy insurance that is over-priced and not providing very good coverage.
    The government must protect consumers. And in that context, it is fair to mandate insurance.

  9. Maggie, you are an optimistic person and see the glass as full ( I thought healthcare reform was stalled in it’s track when Mr. Daschle resigned until I came across your blog). I don’t understand policies all that well though I work in health care. I am amazed at how ignorant and misinformed physician community is ( I’m one of them). I think starting medicare at 55 yr will very expensive and may go the Massachuttes way without addressing some of wastage in health care. Like you said the fat is not sitting outside, it is marbled. Darmouthatlas.org is a reality but how can we address such complicated issues of over treatments and incompetent use of resources ?

  10. Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss.
    Basically it means as a equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss.the insurer is the company who is selling the insurance policy and the insured is the person who takes that policy.The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.there are various types of insurance such as:-
    1. house insurance
    2. car insurance
    3.human insurance called as medicare
    4.shop insurance
    and so on.
    i mean to say that at present world atleast in all fields the insurance companies will provides this insurance facility to secure our property in the cricis.the insurance also protects our spent money in some field by providing their required amount of our damage property.if we claim for our damage property the insurance company will provide the required price of that property at present time.it’s property i am talking about it covers all those things for which we takes the insurance policies.
    here below i tell you about some losses and their premium and how the losses are calculated, so take a look on that:-
    # Definite Loss. The event that gives rise to the loss that is subject to the insured, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
    # Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
    # Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
    # Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
    # Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
    info@adsenselover.com

  11. Hi:
    I echo Dr. Rick, the question is not just who pays and how, but what do we pay for (see the marbled Dartmouth Atlas). I am glad the administration is looking at evidence based medicine. Lisa, I agree with Maggie, we have to require everyone to participate but at the same time it cannot be unrealistically expensive. I also agree with Barry that Medicare needs reform but I find the argument that it is unfair for the private plans to compete with the government to be disingenuous. One of the leading arguments for privatizing anything is that the private sector is more efficient at delivering services. To hear some of the same people now arguing that it is unfair for a public policy to compete with a private policy sounds like someone trying to have it both ways. (Barry, I am not accusing you of doing this).
    Maggie, what do you think of Bernie Sanders introducing a single payer bill to the Senate yesterday? Good idea? Or does it just look like a competitor to the proposals of Baucus and others?

  12. Maggie,
    The concept of government dictating prices for healthcare services like Medicare does instead of negotiating them has worked OK for Medicare because there is a private sector to shift costs, especially hospital costs, to. If a public insurance option for the under 65 population pursued the same approach to rate setting, it would probably, before long, largely force private insurers out of business which, I know, would be fine with you. If that happened, however, there would no longer be a private sector to shift costs to. With reimbursement rates below costs for most hospitals, they wouldn’t be able to stay in business either unless rates were increased at least enough to allow the reasonably efficient hospitals to break even or make a small profit margin. Isn’t there a saying in the hospital field, “No margin, no mission?” If CMS and the public option paid fair rates in the first place, there would have been less (or perhaps no) need for cost shifting, in which case the private insurers could have competed effectively. So, at the end of the day, we would wind up with a single payer system because the government rigged the system in its favor. People will have no insurer choices except to the extent that they want to buy supplemental insurance and we’ll have less innovation in plan design going forward and probably less innovation in healthcare as well.
    As I noted in my earlier comment, I don’t think we can construct a system where a public option competes with private insurers on a true level playing field as long as the government is both the rule setter and a competitor. Under the circumstances, the insurance industry and Republicans in Congress are right to oppose the public option. Medicare already has more than enough market clout to implement sensible reforms. CMS should show that it can do that before we trust it with even more control over the healthcare system than it already has.

  13. Two brief comments because Bob Laszewski and others have already stated my view of the Machiavellian machinations of AHIP and its member HMOs.
    (1) Dr. Rob Stone, member of PNHP and Hoosiers for a Common Sense Health Plan has used the term Medicare Plan E to describe single payer Medicare for Everybody (Everybody in; Nobody out). I see you have borrowed from Pat S., using the phrase to describe the President’s “public option.” I’ll try to check it out.
    (2) As you know, I’m a former Canadian and a proponent of HR 676, but I am pleased to see that Sen. Bernie Sanders has introduced a new single payer bill in the Senate (S 703). Can we now get Max Baucus and the Senate Finance Committee to “score” the potential savings if single payer were enacted.
    In Common Dreams yesterday (03/26), Dean Baker stressed the critical importance of fixing the economy. Even the President has said that nothing will have a bigger impact on the economy than controlling health care costs.
    Don’t take this personally, Maggie, but I have something to say to all those who refuse to even discuss single payer: “It’s the economy, stupid!”

  14. Martha,
    Martha–
    Yes, looking at what we cover,and how we pay for it (paying for volume rather than value) is key.
    I also agree that conservatives who have prevously argued for privatization because the private sector is more efficient, and are now argument that it woudl be “unfair” to ask private plans to compete with the govt are trying to have it both ways.
    On Sanders bill: It could divide progressives (though single-payer has no chance of passing in Congress-most Americans do not want to give up their employer-based insurance and legislators know this.)
    At a time when progressives need to be united against strong conservative opposition to any form of universal coverage, introducing legislation that might divide them is a very bad idea.
    The only thing to be said in favor of Sander’s action is that it might scare the private insurers and make them more willing to accept a public sector insurance option. But I doubt it.
    Ray–
    Yes, the waste is marbled, and we are going to have to remove it, very carefully, with a scalpel.
    This will require a great many small changes: hiking co-pays and lowering fes for angioplasties unless the patient meets the profile of patients who actually benefit form angioplasties; hiking co-pays and lowering fees for much diagnostic imaging (unless there is evidence that patient who meet a certain profile will benefit); banning construction of new hospitals, wings and surgical centers unless owner can show real need in the communitiy for more beds.
    Also: Medicare now decides how many resident slots there should be each year; now it needs to begin saying how many residents can be trained in various speciatlties. WE don’t need more dermatologists–or orthopods. Dont’ need more cardiologists. And when we have too many specialists in lucrative fields, they have more space in their appointment books, see more patients more often and overtreat.
    These are just a few examples of the many changes that need to be made. Medicare has the clout to do it; and insurers will follow what Medicare does.
    And financial incentives (lower-co-pays and higher fees) can steer both patients and doctors toward more effective,more efficient treatments.
    None of this can happen overnight. It will be part of a continuing process to that will take years.
    Barry–
    You assert that Medicare’s “reimbursement rates are below cost for most hospitals.”
    Why do you think this is?
    Becuase most hospitals are incredibly wasteful.
    They buy redundant, incredibly expensive diagnostic imaging equipment. In order to pay for it, they use it on patients who don’t need it.
    They build more intensive care units for newborns than we need– and then put newborns in an ICU “just to be safe”–separating them from their mothers, and exposing them to the risks of the.
    I could go on.
    As you well know, Barry,
    the typical brand name hospital in the US spends 50% more than the Mayo Clnic, or Geisinger when caring for identical patients. And outcomes are worse at hospitals where costs run higher.
    You suggest that hospitals cannot trim these “costs” (a.k.a. waste) because you are stretching to make an argument as to why the government shouldn’t set prices.
    For decades, hospitals have been set the prices;the DRG forumla tried to change that, but hospitals have found many ways around it. The
    majority continue to be extravagant. (The one exception: hospitals that care for a great many uninsured and Medicaid patients. These are usually public hospitals or academic medical centers located in or near inner-city ghettos.)
    If hospitals had done a better job of reining in expenses, maybe the govt wouldn’t have to set prices. Btu they haven’t. And many have forgotten their mission.
    They became greedy, and so rather than hiring palliative care speicalists, they expand a cath lab (a money-maker) and let patients die in screaming pain.
    They invest in frills and hotel-like amenities that atract well-insured patiets– and fail to put money into systems that could reduce infections, or check-lists that could reduce errors.
    For too long, they have been the price-makers while taxpayers, the public and employer shave been the price-takers.
    Barry–
    To respond to your other comment: the fact that you think insurers should be able to charge older customers MORE THAN TWICE
    what they charge younger customers suggest that you do not understand the basic concept of insurance.
    It is meant to serve the public good by pooling money from everyone–sick or healthy, young or old, so that we pay for each other. None of us knows when we will become sick; we all know that we are likely to become old. So we spread the risk and benefit collectively.
    As Bob L. has written, the large for-profit insurers have done so many patently unfair a nd sometimes illegal things
    (dropping patients once they become sick, selling people insurance policies
    filled with hidden holes) that they deserve to be regulated–and forced to try to serve their customers. IF they cannot do it as well as the government, then they will have shown us that we don’t need this middle-man in our healthcare system.
    And we cannot afford to pay him unless he is adding value.
    william wabber–
    Health insurance is different from other kinds of insurance in a couple of ways.
    First, with most insurance, you hope never to use it.
    In the case of health insurance, you hope never to use the catastrophic portion, but expect to use the rest of it for ongoing health maintnence. That second half is rather like a savings plan. But it’s pooled savings: you and your neighbors pool your savings because no one knows how much maintenttance they will need.
    The other difference is that it is very difficult to predict how much healthcare anyone will need. Plus, there is so much ambiguityi surrounding the question: “what is effective care?”
    This means that health insurance policies can never be as trasnparent as we would wish.
    Often times, if you ask does a policiy cover X, Y or Z, the true answer is: “it depends” — on so many contingencies . . .
    Harriette–
    Try reading the reports Peter Ortszag has written about healthcre while he was the head of the Congressional Budget Office (they are the folks who “score” legislation, by the way, not Senatne Finance). And look at Ortszag’s testimony on healthcare before Cognress.
    You will discover that yes, escalating healthcare spending does threaten the economy–and that THIS HAS NOTHING TO DO WITH WHETHER A PRIVATE INSURER OR THE GOVERNMENT IS PAYING THE BILLS.
    Medicar has been no more successful than the private sector in controlling spending.
    What drives health care inflation? Overuse of advanced medical technology.
    Many single-payer advocates seem to think that they understand the economics of healthcare better than Ortszag or Obama. I find their unwarranted confidence breaktaking.
    Please do not comment re; single-payer on this blog again. I dont’ want HealthBEat used to spread misinformation and I am frankly tired of pointless debate over something that Is Not Going to Happen. Most people have employer-based insurance and want to keep it.

  15. “the fact that you think insurers should be able to charge older customers MORE THAN TWICE what they charge younger customers suggest that you do not understand the basic concept of insurance.”
    Maggie,
    I said that insurers want to continue to use age and occupation as rate setting criteria. Massachusetts regulators allow them to charge older people and those who work in dangerous occupations up to twice as much as younger people. I didn’t say that I supported this approach. Indeed, I favor pure community rating, though I have some concerns about the financial burden pure community rating will place on younger people to help finance a benefit that they, as a group, will not use very much until they are well into middle age.
    Young people pay more than older folks for car insurance, because they have more accidents. It’s understandable if they think they should pay less for health insurance because they don’t make nearly as many claims on the system. The problem is that healthcare is so expensive on an absolute basis that an experience rated model based primarily on age would be prohibitively expensive for the 50 and over population. Medicare, for example, would have to charge $900 per month per person ($1,800 per month per couple) to reflect the actuarial value of its offering. Precious few seniors could afford that. On the other hand, car insurance in most places costs well under $1,000 per year per vehicle. Homeowner insurance for an average home is under $1,000 per year for many and probably well under $2,000 for most of the rest. It’s more expensive in a hurricane zone. Life insurance is rated based on age, health status and occupation. The same is true for disability insurance. Health insurance is a special case. The most important thing we can do to make it more affordable and sustainable is to redouble our efforts to drive out the excess cost. To do that, every stakeholder group is going to have to contribute something significant.

  16. Barry–
    I am very glad that I misunderstood what you were saying.
    As you point out in this blog, of youger Americas did not pool their money with older Americans, insurance for those over 50 would be prohibitively expensive.
    And Medicare will be avialable to the younger taxpayers who are paying into it today– as long as we do the things that the Meicare Payment Advisory Commission suggests.
    It will take time, but it is perfectly doable. And there is a clear consensus (among people like MedPac, CBO, etc.) on what needs to be done.
    Its not a mystery. It just requires spine.

  17. This is sort of the UAW GM bondholders GM Management redux. Use your political friends to make sure the other guy compromises. Why negociate with yourself, when you know that this is a going to be a political process anyway?
    Concessions now are public relations maquarading as compromise, like “Sorry works”, for the trial bar.
    The insureres don’t budge, because they think the public doesn’t trust the government and that their friends will protect them. They just want to sabotage the public plan with enough poison pills so it won’t fly.
    The self-styled reformers don’t want to suggest a two tier system because it violates their sense of social justice. In Zimbabwe everyone is equal. (except the political elite with whom the reformers identify). If it works in Harare, why can’t it work here?
    My problem with the government option is that it will include way way way too much treatment. This will lead to more waste. I don’t want my premiums paying for things that are a waste of money, no matter who pays for them.
    We have been living way above our means for fifty years. I don’t want my children to live in their 15 year old cars so that their grandmother can have a “free” cataract operation in her nineties.
    The two tier approach has the political advantage of leaving something for the immensely powerful insurance companies to sell.
    And naturally, the trial lawyers are window shopping the private jet websites in anticipation of the chaos these poorly thought out top down changes will likely engender.

  18. Christopher–
    Don’t you read the newspapers– or Health Affairs?
    Both Medicare and any public-sector insurance plan are gong to be using comparative-effectivness research to begin really squeezing the waste our of our system. This is why
    Obama set aside so much money for the reserach adn put people like Jim Weinstein (who now oversees the Dartmouth operaiton that has identified so much of the waste)on the 12-person panel to oversee the reserach.
    There is no one on the panel who has a vested intersted in continuing noe waste– no drugmaker
    representative,not even a consumer advocate for a particular disease. (The only disease represented is
    Alzheimer’s, and I think we all agree that we’re not wasting money trying to do what we can for Alzheimer’s victims.)
    And no we don’t want a tiered system based on abillity to pay.
    Healthcare is not a privilege, access to effective care it is something that any civilized society wants to provide to all of its citizens.
    If I were 95, and had cataracts, I certainly should be able to have a caract operation. I srll would want to read–and write.

  19. It is certainly a good move of insurance companies to charge at flat rate from the people of a community on the condition that all should get the insurance health cover. At one side it will lower the premium amount to be paid by the sick people while on the other companies will also get increased revenue because of increased customers.

  20. To Dr. Rick Lippin
    Southampton,Pa –
    You are going to get change but I am not sure you will like it.
    Striking German Doctors Shed Light on System Ills”
    “German hospitals are coming under increasing pressure to cut costs, and are seeking concessions from their medical staff. Doctors working in hospitals are paid roughly the same salary as an elementary school teacher, despite having to endure work weeks that often amount to more than 60 hours.
    Of course you need to read the papers in the EU to find the problems of the so called panacea of national health.
    To me, the USA has turned into a child like playground, full of people with want’s. They don’t care about freedom and are happy to allow the government to control them.
    Glad I am old enough that I will soon be leaving this planet.
    Check out all the national plans and you will find that salaries for health care providers is lowered. Only one place they aren’t and that is the GP’s in Britain.
    But then maybe Dr Rick already makes too much. Perhaps the salary czar will need to cut his pay. And that is good.

  21. Maggie for you to even utter these words show your lack of expertise in financial or insurance.
    ““the fact that you think insurers should be able to charge older customers MORE THAN TWICE what they charge younger customers suggest that you do not understand the basic concept of insurance.”
    The “basic” concept of insurance (your words) is transfer of risk. That means that risk must be quantified and determinable.
    There is risk sharing but that is more about co-pays etc.
    The health risk of a young person is much much less than a 65 year old person. Are you willing to allow the fuel tank truck driver to share in your pool for your private care insurance? Even the Dutch, in the 1600’s, when ships were requesting insurance, they understood risk better than your statement.
    It is the business of insurance and that is a bit different than everyone swimming as one in the community swimming pool.