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Health Insurers Will Accept Universal Coverage! On Condition!

Posted Dec 20 2008 6:43pm

Stanley Feld M.D.,FACP,MACE

A few weeks ago in a speech in Detroit the CEO of Aetna Healthcare Urged Mandatory Health Care Coverage.

He said it would lower costshealthcare insurance costs.

Of course the CEO of Aetna would want mandatory healthcare coverage with the government providing a subsidy to consumers who could not afford to buy healthcare insurance. The more lives insured the more profit his healthcare insurance company would make. Aetna CEO’s statement is clearly self serving.

The cost of healthcare insurance could decrease or stay the same.

If the government subsidizes the premiums of all Americans the price of the premium might also go up. The Massachusetts mandate has experienced cost overruns for a very simple reason Premiums have gone up in Massachusetts and the government has paid the difference. Premiums are put out for bids and the healthcare industry is in control of determining the bid.

" The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.”

Consumers should have freedom of choice of physicians. If they want healthcare insurance they should be able to buy it. If they qualify for government assistance they should be able to buy it under the same conditions a consumer not qualifying for government assistance buys insurance. The government should not mandate consumers to buy healthcare insurance.

The healthcare insurance industry claims “In the absence of such a mandate, insurers said, many people will wait until they become sick before they buy insurance.”

If the consumer got sick and did not have healthcare insurance the financial penalty for buying insurance after they got sick would be higher than before they got sick. This would be a deterrent to consumers’ gaming the system and not becoming covered by insurance. Healthcare insurance at an affordable price should be available to all.

“The proposals, put forward by the insurers’ two main trade associations, have the potential to reshape and advance the debate over universal health insurance just as President-electBarack Obamaprepares to take office.

The problem is there is no transparency in the pricing of healthcare insurance nor is there an effective system of competitive pricing. There is also no deterrent to overuse of the healthcare system by consumers. Consumers have no incentive to keep the price down for their care. There is no price transparency or pricing competition among hospital systems. Hospital systems have inflated fees. Their actual costs of services are not transparent to the government or the healthcare insurance industry.

Physicians can be patient advocates. The public must be empowered to make physicians competitive.

Finally, pharmaceutical prices are random and in most causes not justified. There are at least five different prices for pharmaceuticals. The prices vary from a retail price, an average wholesale price and a wholesale price.

The temptation by healthcare policy wonks is to regulate the pharmaceutical industry by imposing price controls. Price controls never work. They only make things worse. Real price transparency and competitive pricing of drugs is essential. It is also essential to make physicians aware of the prices of drugs they prescribe. If the brand name drug is ten times the price of a generic drug both the patients and physicians should know it and be aware of the difference. If physicians feel the drug effect of the brand does not justify the price difference. Physicians will order the generic drugs.

“Research suggests that some insurers turn down 10 percent or more of applicants for individual coverage because of their pre-existing medical conditions.

A 55-65 year old male with mild obesity (BMI=28), mild hypertension and an LDL of 105 (normal is less than 100) would be rejected by a healthcare insurance company. If he was in a group insurance plan he would be accepted. Unknown to his employer the premium the employer pays for all his employees would be increased. Medicare will automatically accept this person at age 65.

“Mr. Obama said he wanted to be certain that insurance was affordable and available to all before considering such a broad requirement”

This is very wise on Mr. Obama’s part because the insurance industry is going to control the premium. He needs to guarantee affordability.

“In the individual market, people can choose whether or not to apply for coverage,” Mr. Hamm said in an interview. “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.”

The insurance industry wants to be assured that the market is expanded. They are killing the goose that laid their golden egg because they can be cut out of the picture entirely.

“The new policy statements are silent on two important issues: how to enforce an individual mandate and how to regulate insurance prices, or premiums. While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it. Rate regulation promises to be a highly contentious issue, since it pits the financial interests of insurers against those of consumers.”

Medicare has guaranteed rates and insurability regardless of the severity of the illness. The government subsides the shortfall. The insurance industry’s only interest is net profit without price transparency.

Alissa Fox, a vice president of the Blue Cross and Blue Shield Association, said the individual mandate was an indispensable corollary of any approach forbidding insurers to reject applicants because of health status.

If the healthcare insurance industry continues to make demands that guarantee excess profits the government will impose universal coverage with a single party payer (socialized medicine) and all the problems that will bring.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

 

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