Barack Obama – Can we re-imagine health insurance?


With the election of Barack Obama, there is a lot of hope and optimism about the potential for health care reform.

There is also some nervousness.

The nervousness originates from those who think that the current economic crises will inhibit reform efforts.  That somehow the price tag of reform will scare people away from health care reform.  I am encouraged by an insightful article by Ezra Klein on Obama’s choice of Director of the Office of Management and Budget.

According to Klein, Peter Orszag believes that health care reform is the key to the fiscal future.  Since it his office that will pin the price tag on any health care proposal, his biases matter.

Others are worried that Obama might be soft on insurance companies.

I am not a great friend of the insurance companies.  I deal with them every day.  But neither am I a knee-jerk opponent of insurance companies.

Insurance companies reflect the markets they operate in.  And health insurance companies function in a market that brings out their worst qualites.

Unlike home insurance, or auto insurance, there is no legal or market mandate to have health insurance.  This allows health insurance companies to avoid insuring the very people that need it the most – high risk (read sick) individuals.

Outside of the Medicare supplemental insurance market, there are very few limitations on what should be covered or not covered in a health insurance plan.  This gives insurance companies the license to put restrictions and exclusions in their policies as they, or their customers, see fit.

Because there is no agreement on how and how much to pay providers, doctors and hospitals are free to participate or not in insurance plans, leaving consumers, as well as providers, dazed and confused by balance billing, out of network pricing and usual and customary charges.

I don’t trust doctors to always do the right thing by their patients.  Only a small percentage of bad medicine ends up in successful litigation against a medical provider.  Communicating the latest in evidenced based medicine is an important practice management and public health service.  That role is mostly assumed by insurance companies.  But doctors need to understand the rules.  When they work with multiple insurance companies, each with different rules, that can only be confusing to both doctors and patients.

But we can re-imagine the role of insurance companies.

All other countries in the world are able to cover their entire populations at half what we pay and most of them use some form of insurance companies.

The primary vehicle for single payer HR 676 is an expanded version of Medicare.  Medicare hires insurance companies as intermediaries to do much of the detail work of administering a fee for service medical reimbursement plan.

Imagine if everyone was enrolled or had to enroll for medical insurance.  There would be no medical underwriting.  Cost would be spread among a larger population.

Imagine that there were a limited number of benefit design options.  Consumers and medical providers would understand the coverage rules and work to stay inside them, avoiding surprises for  both patients and consumers.

Imagine that reimbursement was removed from the control of insurance companies and that providers who did not participate with the insurance could not bill insurance companies and those who did, could not balance bill.  Providers would spend far less money chasing unpaid bills – far and away the least productive expense in our current system – and consumers could know in advance what they were expected to pay.

Imagine that all doctors within a community were governed by the same evidenced based standards of practice.  The doctors would understand the rules, and patients would be better served.

The problem is not insurance companies.  The problem is lack of imagination.


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