Selvoy M Fillerup MD

It was suggested to me by Tom Garvey that I make some sort of contribution at this blog site.

Tom also sent me the link to Jacob Hacker's HEALTH CARE FOR AMERICA: A PROPOSAL...

I will place a link to that proposal on my own small website www.chroniccrisis.com and also these comments that I sent Tom in response.

Tom,

This is good stuff. Attached is the proposal copied into Word and with highlights that I think are pretty much self explanatory.

My only real concern with the HEALTH CARE FOR AMERICA proposal is that it does not specify "guaranteed issue." It does mention the words "guaranteed coverage," but there is a real difference between the two.

I am of the opinion that a policy of guaranteed issue:

---dissuades private insurers from cherry picking (this discourages, but probably does not prevent, private insurers from providing poor service to the very ill hoping they will move to the public plan - "dumping")

---holds the public plan accountable for good service to the very ill (this would allow the very ill to go to a private plan if they get jilted by poor service in the public plan) (the private insurance sector would now care how the public plan performed its duties if it thought that the very ill might switch over to private insurance)

This is all related to the concept of clients shopping for "value" which cannot be done if they cannot really shop. And they cannot really shop unless they can actually buy where they perceive value; whether that is for the public plan or one of the private plans. "Guaranteed issue" keeps both the private insurers and the public plans motivated to assure good service in both sectors.

If I have not explained this well enough let me know.

As I you already know, as a result of my studies of internation healthcare systems I am a firm believer that healthcare systems that include a private health insurance industry are more likely to build infrastructure in response to patient utilization patterns than are other healthcare systems. This decreases waiting times.

But I think this proposal deserves my support.

Sel

It isn't just payment.  It is also cost avoidance.  Health insurance is an accounting gimmick.  There is no need for it.  It's one useful feature is redistribution.  That is a PUBLIC function.  It should be taxes, not privatized taxes.

I wouldn’t call SP health plans insurance plans. They eliminate the need for insurance schemes since they create an entitlement for health care and promise to use the police power of government to force someone else to pay for my care. At least that is the way I understand SP.

Re: They eliminate the need for insurance schemes since they create an entitlement for health care and promise to use the police power of government to force someone else to pay for my care.

This is incorrect, You are paying for your own care, but with taxes rather than premiums.

What a bunch of bull shit.

Insurance companies spread risk of large expenses across time, that is what insurance means. The risk that insurance companies take is miscalculating their premium levels and not having enough assets to pay claims.

You are confusing insurance and a prepaid health care plan. Insurance is in fact a savings account. Problem is it may take more than a lifetime to save the amount I need…enter the insurance company to pay my bills if need be before I can save the amount I need.

I assume that SP will be paid for with a progressive tax. If that tax tracks the progressively of the current income tax, a relatively small number of people will pay the majority of the costs of health care. It all depends on the details of the plan, of course. My over all point is that there is no relationship between payer and consumer.

Life insurance might be an income tax avoidance technique but I don't understand your point about health insurance. No one including the insurance companies know who will get ill, or when or for how long. Using the law of large numbers they pool large amounts of money. If their actuaries did their job insurers will payout less than they took in. However, for the insured they have transfered the risk of getting ill to the pool of policyholders.

How is this not about transfering risk?

Daniel A. Greenbaum

That might be true, if they weren't using narrow risk pools to avoid what you are describing.  Health insurance uses carefully defined benefit packages and risk pools to strictly link this year's premiums to this year's benefits with an occasional exception.  As this year's premiums pay for this year's benefits, this is ACCOUNTING, not risk.

Try adding up all of your medical care for this year (the actual payments to health care providers) then try adding up your and your employer's premium payments (if your employer is ERISA self insured, this information may be hard to come by).

You will likely find little gap unless you are in your 20s (here there is some greater risk relationship, smoothing out the inter-year gaps).

Oh, the premiums will be greater, the insurance industry is skimming 20%.

The real health risk in the US is guaranteed by the United States government and by the state governments, but only after you become impoverished or aged.

What health insurance companies do is provide transaction management and accounting. 

Re: Insurance is in fact a savings account.

This is NOT how insurance works. Have you ever heard of anyone refused an insurance pay-out because their "account" did not have enough money in it?
Back when I was 19, I bought a new car and of course had full coverage on it. Five weeks (and maybe $200 in premiums) later a lady ran a stop light and totaled my new car. My insurance paid out about $8000. If insurance worked the way you suggest the company would have handed me a check for $200 and that would have been it. Nor did I owe the company a penny after that (in fact I did not own another car and did not purchase car insurance again for five years) So just where did that other $7800 come from? From premiums paid by other people! Now according to you that was a disusting example of socialism, a denial of the right of those other policy holders to keep their money for themselves. But that's how insurance works. It's inherently redistributive. Why can't you accept that blatantly obvious fact?

You missed the point. Admittedly the saving account analogy is a bit lame.

Your premiums were set as if you were going to save $8000 in the time that it would statistically be before you got into an accident. The insurance company commits to paying your $8000 whenever needed. If you had continued to insure a car you would have probably paid back the $8000 before having another accident if the premium calculations were right. As it was you were replaced by someone else.

There is no socialism involved since your premiums are set such that over time you will pay for all your benefits. Now you came out ahead since you beat the statistics, but that was a matter of chance. No more so than gambling is socialism. If you continue to play you will break even more or less.

If you look at this post, you will see that I have allowed that health insurance companies do have an occasional exception to their risk avoidance plan.  This isn't out of generosity or even good faith, it is because they are imperfect risk avoiders.  The incidence you describe, which has an extraordinary low probability, would be such an occasion.

The practice of health insurance companies since the 1960s has specifically aimed at avoiding the sort of activity you are discussing.  By narrowing risk pools (excluding people who actually might file claims) they gain a "competitive advantage" in pricing.  Thus, they convert themselves from insurance firms to accounting agencies. 

They also churn products but lock out people who already have health conditions, thereby once again gaining a competitive advantage in premiums for the well, but driving up premiums who have health conditions.

In other words, health insurance companies are specifically engaged in NOT insuring, which would involve maximizing the size of the pool.  They prefer claims management of routine services (accounting).